InTents June/July 2022 - 38

business | tips and techniques
How to decipher Incoterms
What you should watch for when buying equipment
By James Waite & Don Galvez
Q
Understanding Incoterms
First published in 1936 and having
since been translated into 29
languages, Incoterms have garnered
general acceptance throughout the
shipping industry worldwide, providing
a crucial means of expediting the
shipping process while enabling
parties on both sides to avoid
misunderstandings. But despite
their popularity, Incoterms remain
something of a mystery to even
seasoned equipment professionals.
uestion: I'm buying some equipment,
and the shipping terms in
the purchase agreement refer to " EXW
Incoterms 2020. " I'm generally familiar
with " Incoterms, " but I don't really have a
lot of time to study what each one means.
Can you give me a summary of what I'm
dealing with when a contract I sign references
" Incoterms " and what I should be
looking out for?
Answer: Referencing Incoterms®
in a
contract that requires shipping generally
is a good idea, whether the shipment is
coming from overseas or from within
the United States. That said, you're in the
Freight Collect Terms
Group
Incoterms:
Ex Works
Risk Transfer:
Export Packaging
Loading Charges
Delivery to
Port/Place
Export Duty,
Taxes & Customs
Clearance
Orgin Terminal
Charges
Loading on Carriage
Carriage Charges
Insurance
Destination
Terminal Charges
Delivery to
Destination
Uploading at
Destination
Import Duty,
Taxes & Customs
Clearance
38 intents june-july 2022
At Buyer's
Disposal
Seller
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Negotiable
Buyer
Buyer
Buyer
Buyer
Any Mode(s) of
Transportation
EXW
FCA
Free
Carrier
On
Buyer's
Transport
Seller
Seller
Seller
Seller
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
FAS
Sea and Inland Waterway Transport
FOB
CFR
Free
Alongside
Ship
Alongside
Ship
Seller
Seller
Seller
Seller
Seller
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Free on
Board
On Board
Vessel
Seller
Seller
Seller
Seller
Seller
Seller
Buyer
Buyer
Buyer
Buyer
Buyer
*CIF requires insurance coverage at least as specifi ed in Institute Cargo Clause (C).
Cost and
Freight
On Board
Vessel
CIF
Cost,
Insurance
& Freight
On Board
Vessel
Responsible Party / Charges:
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Buyer
Buyer
Buyer
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Buyer
Buyer
Buyer
Buyer
majority; most people, including lawyers,
don't have time to study them every
time they ship a piece of equipment or a
container of parts.
Generally, Incoterms-short for " international
commercial terms " -consist of
11 " shorthand " descriptions provided by
the International Chamber of Commerce
of the shipping terms that can be applied
to a given contract. Using Incoterms effectively
eliminates the need to go into minute
detail regarding every element of the
shipping process every time a contract for
the purchase, sale, lease, transportation,
etc. of goods is entered into.
Freight Prepaid Terms
CPT
Carriage
Paid To
Any Mode(s) of Transportation
CIP
DAP
Carriage &
Insurance
Paid To
At Carrier At Carrier
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Negotiable Negotiable Negotiable Negotiable *Seller Negotiable **Seller
Seller
Seller
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Delivered
at Place
At
Named
Place
Seller
Seller
Seller
Seller
Seller
Seller
Seller
DPU
Delivered
at Place
Unloaded
At Named
Place
Unloaded
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
DDP
Delivered
Duty
Paid
At Named
Place
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Negotiable Negotiable Negotiable
Seller
Seller
Seller
Buyer
Buyer
Seller
Seller
Buyer
Seller
Buyer
Seller
**CIP now requires insurance coverage at least as specifi ed in Institute Cargo Clause (A).

InTents June/July 2022

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