| Communication is crucial in international import & | | | | it obligatory for the seller to arrange for almost |
| export, where both buyers and sellers are located a | | | | everything including export duty expenses, loading |
| long way away, there's every chance of | | | | and unloading expenses, landing charges, |
| misunderstanding in the interpretation of various | | | | transportation, insurance and custom clearance. |
| terms used in contracts and agreements. These | | | | Incoterms are not applicable to all aspects of trade, |
| confusions and misapprehensions can cost one or | | | | however they do standardize most of the terms |
| both parties, dearly. What sounds pretty simple and | | | | used in international trade. For example, they spell out |
| straight-forward to a buyer sitting in United States, | | | | the terms of delivery in detail, and establish the |
| could turn out to be a perplexing one for the seller in | | | | responsibilities for buyers and sellers as to who will |
| China. | | | | bear the expenses of insurance, clearance or various |
| This problem continued to exist and resulted in many | | | | other taxes. Another important implication of |
| mix-ups and losses until the International Chamber of | | | | "Incoterms" is the reduction (or removal) of |
| Commerce set down "Incoterms", which is a set of | | | | uncertainty about the transfer of risk. |
| 13 terms, referred as | | | | As an exporter or importer, you need to spend |
| 1. EX-Works | | | | some time on understanding each of these 13 |
| 2. FOB (Free On Board) | | | | "Incoterms" and their explanations given on the |
| 3. FCA (Free Carrier) | | | | official website of "International Chamber of |
| 4. FAS (Free Alongside Ship) | | | | Commerce". Each of them is an agreement in |
| 5. CFR (Cost and Freight) | | | | essence, with predetermined terms and condition, for |
| 6. CIF (Cost, Insurance & Freight) | | | | that reason each of them has got different |
| 7. CPT (Carriage Paid to) | | | | advantages and disadvantages. After a careful study, |
| 8. CIP (Carriage and Insurance Paid to) | | | | maybe you can underline the best ones and then |
| 9. DAF (Delivered at Frontier) | | | | stress on using that particular Incoterms when |
| 10. DES (Delivered Ex Ship) | | | | getting into an agreement with some buyer or seller. |
| 11. DEQ (Delivered Ex Quay) | | | | Incoterms are acknowledged all over the world (by |
| 12. DDU (Delivered Duty Unpaid) | | | | courts, governments, etc); therefore a good |
| 13. DDP (Delivered Duty Paid) | | | | comprehension of all of these terms is a must for all |
| Businesses can choose any of these 13 terms | | | | international exporters. Remember, ICC keep making |
| according to their own needs and requirements. For | | | | minor changes (not very often though), it's important |
| example, "Ex-works" inflict the minimum liability for | | | | to keep a track of these modifications. |
| seller; on the other hand "Delivered Duty Paid" makes | | | | |