We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
Home » Coming to terms
fastlane

Coming to terms

September 26, 2011
Clifford F. Lynch
No Comments

As we wrote last spring ("Making sure nothing's lost in translation," FastLane, May 2010), for those new to the foreign trade game, one of the top concerns is likely to be the delivery arrangements—in particular, who's responsible for costs like freight, insurance, customs charges, and damage in transit. To clarify matters, the International Chamber of Commerce (ICC) has published a list of International Commercial Terms, or Incoterms, which are internationally recognized and clearly define both the buyer's and seller's obligations in common transactions. The intent is to cut down on the uncertainty arising from differing interpretations of terms of sale from one country to another.

Since that column appeared, the ICC has published a revised set of terms, known as Incoterms 2010. In addition to cutting the number of terms to 11 from 13, the chamber has also reclassified them. The older terms (Incoterms 2000) were divided into four groups, based on where responsibility transferred from one party to the other. The new terms are divided into two groups, based on whether they apply to all modes of transportation or are specific to ocean and inland waterway transport.

Although this might sound confusing, the alterations are relatively minor. In fact, nine of the terms remain unchanged. What follows is a short summary of the Incoterms 2010, with a few notes on the changes:

Incoterms for all modes

Ex-Works means the buyer assumes total responsibility for the shipment. Delivery is accomplished when the product is handed over to the buyer's representative at the plant or DC. The buyer is responsible for freight costs, insurance, export and import clearance, and all customs charges.

FCA (Free Carrier) provides that the seller fulfills his responsibility when he delivers the product to the carrier.

CPT (Carriage Paid To) provides that the seller pays transportation costs and export clearance charges, but the buyer pays for insurance.

CIP (Carriage and Insurance Paid To), a term used primarily for multimodal moves, is essentially the same as CPT, except the seller must also purchase cargo insurance in the buyer's name.

DDP (Delivered Duty Paid) means the seller is responsible for all risks and charges up to the consignee's door. This is the maximum obligation that can be assumed by a seller.

DAT (Delivered at Terminal) (new). Delivery is accomplished when goods are unloaded and placed at the disposal of the buyer at a named terminal.

DAP (Delivered at Place) (new). Delivery is accomplished when goods arrive and are ready for unloading at the destination.

(Note: These last two terms replace the 2000 Incoterms "Delivered at Frontier," "Delivered Ex Ship," "Delivered Ex Quay," and "Delivered Duty Unpaid.")

Incoterms for ocean and inland waterway transport

FOB (Free on Board) means that the seller is responsible for getting the goods to a port. The buyer bears the cost and responsibility from that point on.

FAS (Free Alongside Ship) requires the seller to deliver the product alongside a given vessel at a port.

CFR (Cost and Freight) deals with the cost of the merchandise as well as the freight costs. The seller is responsible for the product and the transportation costs to the destination port.

CIF (Cost, Insurance, and Freight) provides that the seller pays for insurance in addition to the product and transportation costs.

Information on the new terms can be found on a number of websites, but the UPS site contains a particularly helpful summary. It can be downloaded at www.ups-scs.com/tools/incoterms.pdf.

Global Logistics
KEYWORDS UPS
  • Related Articles

    U.S. Bank to extend payment terms to shippers while keeping carrier terms intact

    Rail work stoppage averted as engineers, dispatchers agree to contract terms

Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider of logistics management advisory services, and author of Logistics Outsourcing ? A Management Guide and co-author of The Role of Transportation in the Supply Chain. He can be reached at cliff@cflynch.com.

Recent Articles by Clifford Lynch

A New Solution for Some Old Problems

The time has come

The continuing saga of driver shortages

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Big and bulky last-mile delivery segment set for hot growth

  • Outlook 2023: What’s in store for logistics/supply chain?

  • Ports, maritime operators see tide turning as ocean freight tsunami subsides

  • In Person: Steve Beverly of Penske

  • InPerson interview: Rob McKeel of Fortna

Now Playing on DCV-TV

89cfed30 8aac 4284 960d c8c8c1886e16

Have you checked your read rate lately?

DCV-TV 4: Viewer Contributed
No reads. Unaccounted for boxes. Boxes sent to the wrong place. A logistics nightmare! But this nightmare doesn’t have to come true. SICK’s linear line scan camera is what dreams are made of for your logistics operations. And if you’re worried about motion and vibration from conveyor belts...well, there’s no reason...

FEATURED WHITE PAPERS

  • The five best applications for robotic lift trucks in warehouse environments

  • Fulfillment Facility Improved Efficiencies by 4x

  • 3PLs: Complete Orders Faster with Flexible Automation

  • Reusable Packaging for the New Wave of Supply Chain Automation

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing