INCOTERMS 2020 - BRIEF EXPLANATION

The ICC ( International Chamber of Commerce) has classified these Incoterms depending on the mode of transport used by companies.  The classification is presented below:

Rules for any mode or modes of transport

EXW: Ex Works (factory)
FCA: Free Carrier (free carrier)
CPT: Carrier paid to (transport pays up to)
CIP: Carrier and insurance paid to (transport and insurance paid to)
DAP: Delivered at place
DPU: Delivered at place unloaded
DDP: Delivered duty paid

The appropriate transport types to apply these Incoterms are air or surface (excluded sea), even when several types of transport are used (MULTIMODAL).

Rules for sea and inland waterway transport

FAS: Free alongside ship
FOB: Free on Board
CFR: Cost and Freight (CIF)
CIF: Cost, insurance and freight

These Incoterms will be the ones that need to be used when the point of delivery and the place to which the goods are transported are ports.

Incoterms - International Commercial Terms

INCOTERMS stand for “International Commercial Terms” , used by the international sales parties (buyer and seller) in order to make the contract obligations of the parties clear. The meaning of Incoterms can be reduced to the following: Cost sharing (the seller will know exactly how far will he face the costs of transportation, which will allow the purchaser include the expenses in the price offered and then to compare them with other offers), transmission risk (the buyer will know when transport risks will correspond to him). In other words, as the goods may be damaged during transport, the Incoterm specifies who will be held responsible for the damage. The destination where the goods will be delivered (this Incoterm specifies the place where the seller agrees to leave the goods and therefore the place where the seller must collect the goods). The Incoterms are meant to help when writing the contract, so that the parties can understand, considering that each country has its laws and customs and could not coincide with those of other countries. ICC created the Incoterms so that the parties could bring them into their contracts. The parties are free to apply them or not, and select those which are more suitable depending on each contract.