Incoterms is the abbreviation for International Commercial Terms, and identifies the commercial practices commonly used in the sale of movable property (ie goods that can be geographically transferred) that govern the distribution of liability, costs and risks of delivery of goods, between seller and buyer . It’s good to know that these are not legal regulations, so they do not automatically apply to sales contracts, but they go from time to time to agree. So knowing in depth their meaning is very important to anyone who has commercial relationships, in order to avoid getting into risky situations.
Incoterms allow you to define the time of delivery, understood as the time when the responsibility passes and the risks of transport between the seller and the buyer occur. It simply helps identify who, between the seller and the buyer, has to deal with the shipment and to where.
Incoterms have been an institution for over sixty years of precision since 1953. During the decades they have been frequently updated until their latest version of 2010. The terms indicated in incoterms are represented in acronyms, which may seem unclear at a first reading, but understandable once some concepts have been clarified. So let’s see what I am.
They are divided into two distinct groups: the first contains the terms valid for any type of transport, the latter only covers the terms applicable to sea or river transport.
Brief description of Incoterms 2010
“Ex Works” means the seller makes the goods available to the buyer at his office or at the end of the manufacturing process. The seller is not responsible for any risk, cost or liability. All shipping costs are at the buyer’s expense. It is commonly said that the factory is free.
“Free Carrier” the seller delivers the goods to the courier indicated by the buyer, at his home or another place designated by the buyer. In this case, the seller is responsible, and is responsible for the costs and the risks, for the loading and transporting stage to the courier office.
“Carriage Paid To” the seller delivers the goods to the carrier at a place agreed upon. The seller must therefore enter into a contract of carriage and pay the costs up to the agreed place.
“Carriage and Insurance Paid to” means that the seller must deliver the goods to the carrier in a designated place. The seller must therefore enter into a contract of carriage and pay shipping costs to the place of destination agreed upon. The seller must also enter into an insurance coverage contract against the buyer’s risk of loss or damage during transport. In this case, however, the insurance coverage offered will be minimal.
“Delivered At Terminal” means that the seller is responsible for the carriage until the goods, once the carrier has prepared the unloading operation, have come to a location agreed as a port or a terminal. “Terminal” identifies a dock, a port, a warehouse, or an air cargo terminal.
“Delivered At Place” means that the seller assumes all the risks of transport until the goods are discharged at the place agreed with the buyer.
“Deliverd Duty Paid” means that the seller is responsible and takes care of all the risks and costs of transport up to delivery at the place agreed with the buyer, and takes care of all the risks and costs of the customs clearance operations.
“Free Along Side” significa che il venditore consegna la merce sottobordo, ad esempio su una banchina o una chiatta, alla nave designata dal compratore al trasporto. Il rischio e la responsabilità della merce passa dal venditore al compratore quando la spedizione viene messa a disposizione lungo la banchina. Tutte le fasi del trasporto a partire dalle operazioni di carico della nave sono sotto la responsabilità del compratore.
“Free On Board” significa che il venditore consegna la merce presso il luogo di carico della nave ed è responsabile del carico della spedizione sulla nave indicata dal compratore.
CFR (o C&F)
“Cost and Freight” significa che il venditore consegna la merce a bordo della nave designata dal compratore, ma sostiene le spese fino al luogo di destino, o il punto di destinazione convenuto. Il rischio di perdita o danneggiamento dei beni passa quando le merci sono a bordo della nave.
“Cost Insurance and Freight” come nel caso del CFR, il venditore consegna la merce a bordo della nave designata dal compratore, ma oltre a pagare le spese di spedizione fino al destino convenuto, dovrà stipulare anche una copertura assicurativa minima contro il rischio del compratore di danni e perdita derivanti dal trasporto.