Rules for any Mode or Modes of Transport

EXW (Ex Works). This incoterm represents the maximum obligation for the buyer: the seller has the goods ready for collection at his factory, and the buyer has to cover all costs and bear all risks until they reach his warehouse. It can be used for all forms of transport.

FCA (Free Carrier). The seller delivers the goods to the first carrier (this is the point at which the passing risk occurs). The buyer arranges and pays for transportation, freight and insurance.

CPT (Carriage Paid to + named destination). The seller delivers the goods to the first carrier (at which point the passing risk occurs) and pays freight charges. The buyer arranges and pays for transportation and insurance.

CIP (Carriage and Insurance Paid to + named destination). The seller delivers the goods to the first carrier (passing risk), pays freight charges and arranges and pays for insurance. The buyer only has to arrange and pay for transportation.

DAT (Delivered at Terminal) means that the seller deliverswhen the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the port or place of destination. “Terminal: includes any place, whether covered or not such, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.

DAP (Delivered at Place) means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. The seller bears all risks involved in bringing the goods to the named place.

DDP (Delivered Duty Paid) Means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The seller bears all costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export, but also for import, to pay any duty for both export and import and to carry out all customs formalities. DDP represents the seller’s maximum obligation.

The first class includes the seven Incoterms 2010 rules that can be used irrespectively of the mode of transport selected and irrespective of whether one or more than one mode of transport is employed. Such Incoterms can be used even when there is no maritime transport at all. It is important to remember, however, that these rules can be used in cases where a ship is used for part of the carriage.

2. Rules for Sea and Inland Waterway Transport (only)

When goods are to be sent by ship, the following costs are to be paid:

1. The cost of transporting the goods from the seller’s factory or warehouse to the port of shipment, from which they are to be shipped abroad.

2. The cost of loading the goods onto the ship at the port of shipment.

3. Freight costs – the charge made for carrying the goods are being transported.

4. The insurance costs incurred while the goods are being transported.

5. The cost of unloading the goods when the ship reaches the port of destination in the importing country.

6. The cost of transporting the goods from the port of destination to the buyer’s warehouse.

FAS (Free Alongside Ship) means that the seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment. The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the buyer bears all costs from that moment onward.

FOB (Free on Board) means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onward.

CFR (Cost and Freight) means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

CIF (Cost, Insurance and Freight) means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

In the second class of Incoterms 2010 rules, the point of delivery and place to which the goods are carried to the buyer are both ports, hence the label “sea and inland waterway” rules. Under the last three Incoterms rules, all mentioned of the ship’s rail as the point of delivery has been omitted in preference for the goods being delivered when they are “on board” the vessel. This more closely reflects modern commercial reality and avoids the rather dated image of the risk swinging to and fro across an imaginary perpendicular line.