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give us a call on 01628 532613
A Guide to Incoterms Risk and Responsibilities
Each Incoterms rule specifies:• the obligations of each party
(e.g. who is responsible
for services such as transport; import and export clearance
etc)
• the point in the journey where risk transfers from the seller
to the buyer
• which party is responsible for payment of costs
By agreeing on an Incoterms rule and incorporating it into the
sales contract, the buyer and seller can achieve an understanding
of exactly what each party has agreed to do, and where
responsibility lies in event of loss or damage.
All Incoterms are based on the principle that the risk of loss
or damage is transferred from the seller to the buyer when the
seller has fulfilled the delivery obligation according to the
applicable term. It is important to note that this point can be
different to the point at which the seller is responsible for
paying for the carriage to.
What has changed between the 2010 and 2020 terms? As well as
adopting a new layout with clearer and expanded explanations and a
reordering to add emphasis to delivery and risk the new terms
address other new issues such as Verified Gross Mass (VGM),
Security related issues and a centralising and repositioning of
Costs the main changes were:
Different levels of insurance cover provided for under CIF and
CIP The previous 2010 rules under CIF and CIP terms imposed on the
seller an obligation to provide cargo insurance to a minimum cover
level as applicable under Institute Cargo Clauses (C) which only
provide for restricted cover for losses resulting from a specified
list of major risk perils. The 2020 rules have significantly
changed this position with different levels of minimum cover being
required under CIF and CIP terms. CIF terms remain unchanged with
the minimum level of cover remaining on the restricted cover option
as provided
The Incoterms rules are created and published by the
International Chamber of Commerce (ICC) and are revised
periodically, the most recent revision is Incoterms 2020. The
Incoterms are standard sets of trading terms and conditions
designed to assist companies when goods are sold and
transported.
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A Guide to Incoterms Risk and Responsibilities
for under Institute Cargo Clauses (C) as the terms are aimed
more for commodity trade and bulk risks but now CIP rules requires
cover to comply with Institute Cargo Clauses (A) unless the parties
agree to a lower level of cover. Whilst this is a good protection
this may lead to issues with purchase of cover especially if you
are dealing with used or unpacked cargoes and any on-deck cargo
with is not fully containerised.
Bills of Lading with on-board notation shipped under FCA
termsUnder an FCA sale an on-board bill of lading bill might be
required, such as a Letter of Credit requirement, however under FCA
delivery is completed before loading on board the vessel so the new
revision allows for the on board bill to be issued after the
loading of the goods but when adopted the seller is under no
obligation to the buyer as to the terms of the contract of
carriage.
Sellers or Buyers arranging for carriage on own vehicles under
FAC, DAP, DPU and DDP termsPreviously assumed that carriage would
be by third party carriers the new 2020 rule allows for situations
where goods may be carried on the parties own vehicles
DAT terms amended to DPUThe only difference between DAT and DAP
was that under DAT the seller delivered the goods once unloaded
from the arriving means of transport into a terminal whereas DAP it
was when the goods were placed at the buyers disposal on the
arriving means of transport for unloading. DAT has been changed to
DPU to (Delivered at Place Unloaded) to widen the delivery point
from not only the terminal but to any place.
There are eleven 2020 rules which are divided into two main
groups:
For further information, please email [email protected] or
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Rules for ANY TRANSPORT MODE
• Ex Works (EXW – insert named place of delivery)
• Free Carrier (FCA – insert named place of delivery)
• Carriage Paid To (CPT – insert named place of destination)
• Carriage & Insurance Paid to (CIP – insert named place of
destination)
• Delivered AT Place (DAP – insert named place of
destination)
• Delivered AT Place Unloaded (DPU – insert named place of
destination)
• Delivered Duty Paid (DDP – insert named place of
destination)
Rules for SEA & INLAND WATERWAY ONLY
• Free Alongside Ship (FAS – insert named port of shipment)
• Free ON Board (FOB – insert named port of shipment)
• Cost and Freight (CFR – insert named port of destination)
• Cost Insurance and Freight (CIF – insert named port of
destination)
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A Guide to Incoterms Risk and Responsibilities
The “transport by sea or inland waterway only” rules should only
really be used for bulk cargos (e.g. oil, coal etc.) and
non-containerised goods, where the exporter can load the goods
directly onto the vessel. Where the goods are containerised, the
“any transport mode” rules may actually be more appropriate. A
critical difference between the rules in these two groups is the
point at which risk transfers from seller to buyer. For example,
the “Free on Board” (FOB) rule specifies that risk transfers when
the goods have been loaded on board the vessel. However, the “Free
Carrier” (FCA) rule specifies that risk transfers when the goods
have been taken in charge by the carrier.
Another useful way of classifying the rules is by considering
who is responsible for the main carriage – the buyer or the
seller?
If the seller is responsible for the main carriage, where does
the risk pass from the seller to the buyer – before the main
carriage, or after it?
Lets now look at the individual terms.
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A Guide to Incoterms Risk and Responsibilities
Carriage The seller has no obligation to make a contract of
carriage nor even to load the goods.
The buyer is responsible for carriage from loading the goods
onto a vehicle (even though the seller may be better able to do
this and does often load the vehicle this would still be considered
as the buyers risk); for all export procedures; for onward
transport and for all costs arising after collection of the
goods.
Delivery and Risk TransferThe seller delivers, and risk
transfers, when the goods are placed at the disposal of the buyer
at an agreed delivery point, commonly the seller’s premises, not
loaded to the collection vehicle.
Insurance The seller has no obligation to insure.
The goods are at the buyers risk from the point they are placed
at their disposal at sellers premises and they should consider
purchasing insurance to include risks of loading to the vehicle at
the collection point until received at final destination.
General CommentCan be used for any transport mode, or where
there is more than one transport mode.
IMPORT/EXPORT CLEARANCE - The seller has no responsibility for
export clearance - the buyer is responsible for both export and
import clearance.
This can present operational difficulties as the seller may
still need to be involved in export reporting and clearance
processes and cannot realistically leave these entirely to the
buyer. Consider Free Carrier (seller’s premises) instead.
For further information, please email [email protected] or
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EX WORKS (EXW – insert named place of delivery)Risk transfers
when the goods are made available to the buyer at the seller’s
premises, or at a named place. The buyer bears risk from point of
loading until delivered at destination.
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
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A Guide to Incoterms Risk and Responsibilities
For further information, please email [email protected] or
give us a call on 01628 532613
FREE CARRIER (FCA – insert named place of delivery)Risk
transfers after the seller delivers the goods to the carrier’s
custody at a named place loaded to the buyer’s collection transport
or when delivered to the carrier ready for unloading on the
seller’s transport.
Carriage The seller has no obligation to make a contract of
carriage but are responsible for loading of the goods to the
collection vehicle at the seller’s premises or they may be required
to arrange for transport to a nominated place such as the terminal
or a forwarders warehouse.
The buyer is responsible for arranging carriage.
Delivery and Risk TransferDelivery of the goods takes place, and
risk transfers from seller to buyer, at the named place is the
sellers’ premises at the point the goods are loaded on to the
buyers arranged transport. If the named place is a place other than
the seller’s premises (e.g. a terminal or transport hub,
forwarder’s warehouse etc) at the point the goods are placed at the
disposal of the carrier or another person nominated by the buyer on
the sellers means of transport ready for unloading.
Insurance The seller has no obligation to insure but can if they
wish arrange insurance up to the point of delivery to the
carrier.
The goods are at the buyer’s risk thereafter and they should
consider purchasing insurance from point of delivery to the carrier
until received at final destination.
General CommentCan be used for any transport mode, or where
there is more than one transport mode but most suitable rule for
containerised goods where the buyer arranges for the main
carriage.
IMPORT/EXPORT CLEARANCE - The seller is required to clear the
goods for export, if applicable. The buyer assumes all risks and
costs after the goods have been delivered at the named place.
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
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A Guide to Incoterms Risk and Responsibilities
Carriage The seller is responsible for arranging and paying cost
of carriage to the agreed named place of destination.
Delivery and Risk TransferDelivery of the goods takes place, and
risk transfers from seller to buyer, at the point where the goods
are handed over to the first carrier, unless otherwise
specified.
Insurance The seller has no obligation to insure the goods but
can if they wish arrange insurance up to the point of delivery to
the carrier.
The goods are at the buyers risk thereafter and therefore they
should consider purchasing insurance from point of delivery to the
carrier until received at final destination.
General CommentCan be used for any transport mode, or where
there is more than one transport mode.
IMPORT/EXPORT CLEARANCE - The seller is required to clear the
goods for export, if applicable. The buyer is responsible for
import clearance and any applicable local taxes or import
duties.
For further information, please email [email protected] or
give us a call on 01628 532613
CARRIAGE PAID TO (CPT – insert named place of destination)Risk
transfers to the buyer when the goods are handed over to the
carrier at an agreed place. The seller pays for the carriage to the
named destination.
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
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Carriage The seller is responsible for arranging and paying cost
of carriage to a nominated person at an agreed place of
destination.
Delivery and Risk TransferDelivery of the goods takes place, and
risk transfers from seller to buyer, at the point where the goods
are handed over to the first carrier.
Insurance The seller contracts and pays for insurance cover
under Institute Cargo Clauses (A) (unless a different level of
cover is otherwise agreed between the parties) whilst goods are at
the buyers risk during carriage to the place of destination. (See
separate Insurance Section regarding minimum cover provision with
Incoterms.)
The goods are at the buyers risk thereafter and therefore they
should consider purchasing insurance from point of delivery to the
named place until received at final destination.
General CommentCan be used for any transport mode, or where
there is more than one transport mode.
IMPORT/EXPORT CLEARANCE - The seller is required to clear the
goods for export, if applicable. The buyer is responsible for
import clearance and any applicable local taxes or import
duties.
For further information, please email [email protected] or
give us a call on 01628 532613
CARRIER AND INSURANCE PAID TO (CIP – insert named place of
destination)Risk transfers to the buyer when the goods are handed
over to the carrier at an agreed place. The seller pays for the
carriage to the named destination and insures the goods whilst at
the buyers’ risk under Institute Cargo Clauses (A).
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
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A Guide to Incoterms Risk and Responsibilities
Carriage The seller is responsible for arranging and paying cost
of carriage and for delivering the goods ready for unloading at the
named place of destination (normally the terminal).
Delivery and Risk TransferDelivery of the goods takes place, and
risk transfers from seller to buyer, at the point when the goods
are available for unloading at the place of destination. Unloading
carried out at the buyer’s risk.
Insurance The seller has no obligation to insure, but can if
they wish arrange insurance until discharged at the named place of
destination (normally the terminal).
The goods are at the buyers risk thereafter and therefore they
should consider purchasing insurance following unloading at the
named place until received at final destination.
General CommentCan be used for any transport mode, or where
there is more than one transport mode.
IMPORT/EXPORT CLEARANCE - The seller is required to clear the
goods for export, if applicable. The buyer is responsible for
import clearance and any applicable local taxes or import
duties.
For further information, please email [email protected] or
give us a call on 01628 532613
DELIVERED AT PLACE (DAP – insert named place of destination)Risk
transfers to the buyer when the goods are ready for unloading at
the named place of destination.
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
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A Guide to Incoterms Risk and Responsibilities
Carriage The seller is responsible for arranging and paying cost
of carriage to the named place of destination or to the agreed
point, if any, at the named place of destination. If a specific
point has not been agreed or is not determined by practise the
seller may select the point at the named place of destination that
best suits its purpose.
Delivery and Risk TransferDelivery of the goods takes place, and
risk transfers from seller to buyer, at the point when the goods
have been unloaded from the arriving transport and placed at the
disposal of the buyer at the named place of destination. The seller
bears the risks involved in transport and unloading.
Insurance The seller has no obligation to insure, but can if
they wish arrange insurance up to the point that the goods have
been unloaded from the arriving transport at the named place of
destination.
The goods are at the buyers risk thereafter and therefore they
should consider purchasing insurance from the point that the goods
have been unloaded from the arriving transport at the named place
of destination.
General CommentCan be used for any transport mode, or where
there is more than one transport mode.
IMPORT/EXPORT CLEARANCE - The seller is required to clear the
goods for export, if applicable. The buyer is responsible for
import clearance and any applicable local taxes or import
duties.
For further information, please email [email protected] or
give us a call on 01628 532613
DELIVERED AT PLACE UNLOADED (DPU – insert named place of
destination)Risk transfers to the buyer when goods are unloaded
from the arriving transport at the named place of destination.
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
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A Guide to Incoterms Risk and Responsibilities
Carriage The seller is responsible for arranging and paying for
costs of carriage, import clearance and delivering the goods to the
named place of destination, this can be the buyer’s own premises or
may be a terminal or other named delivery point.
Delivery and Risk TransferDelivery of the goods takes place, and
risk transfers from seller to buyer, at the point when the goods
are made available to the buyer, cleared and ready for unloading
from the arriving conveyance at the place of destination.
Insurance The seller has no obligation to insure, but can if
they wish arrange insurance up to the point of arrival at the named
place (normally the terminal).
The goods are at the buyers risk thereafter and therefore they
should consider purchasing insurance if the named
place is not their own premises from arrival at the named place,
including unloading risk, until received at final destination.
General CommentCan be used for any transport mode, or where
there is more than one transport mode.
IMPORT/EXPORT CLEARANCE - The seller is responsible for both
export and import clearance, duties and taxes. This rule places the
maximum obligation on the seller, and is the only rule that
requires the seller to take responsibility for import clearance and
payment of taxes and/or import duty. This rule can cause
difficulties for the seller as in some countries, import clearance
procedures are complex and bureaucratic, and therefore may be best
left to the buyer who has local knowledge of the processes and best
procedures.
For further information, please email [email protected] or
give us a call on 01628 532613
DELIVERED DUTY PAID (DDP – insert named place of
destination)Risk transfers to the buyer when goods arrive at the
named place of destination ready for unloading with duty having
been paid by the seller.
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
-
www.peterlole.co.ukT: +44 (0)1628 532613
E: [email protected]
A Guide to Incoterms Risk and Responsibilities
Carriage The seller is responsible only for arranging delivery
of the goods alongside the vessel.
The buyer is responsible for arranging and paying cost of
carriage from port to place of destination.
Delivery and Risk TransferDelivery of the goods takes place, and
risk transfers from seller to buyer, at the point when the goods
are placed alongside the vessel nominated by the buyer at the named
port of shipment. The buyer is responsible for loading the goods
and all costs thereafter.
Insurance The seller has no obligation to insure, but can if
they wish arrange insurance up to the point of goods being
delivered alongside the vessel.
The goods are at the buyers risk thereafter and therefore they
should consider purchasing insurance from goods being delivered
alongside the vessel, including loading risk, transport until
received at final destination.
General CommentUse of this rule is restricted to goods
transported by sea or inland waterway. In practice it should be
used for situations where the seller has direct access to the
vessel for loading, e.g. bulk cargos or non-containerised goods.
For containerised goods, consider “Free Carrier FCA”.
IMPORT/EXPORT CLEARANCE - The seller is required to clear the
goods for export, if applicable, but not for import. The buyer is
responsible for import clearance and any applicable local taxes or
import duties.
For further information, please email [email protected] or
give us a call on 01628 532613
FREE ALONGSIDE SHIP (FAS – insert named port of shipment)Risk
transfers to the buyer when the goods are placed alongside the
vessel at port of shipment.
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
-
www.peterlole.co.ukT: +44 (0)1628 532613
E: [email protected]
A Guide to Incoterms Risk and Responsibilities
Carriage The seller is responsible only for arranging delivery
of the goods until they are placed on board the vessel. The buyer
is responsible for arranging and paying cost of carriage from port
to place of destination.
Delivery and Risk TransferDelivery of the goods takes place, and
risk transfers from seller to buyer, at the point the seller
delivers the goods on board the vessel nominated by the buyer at
the named port of shipment and bears risk until goods are on board
the vessel. Once the goods have been loaded on board, risk
transfers to the buyer.
Insurance The seller has no obligation to insure, but can if
they wish arrange insurance up to the point of goods being loaded
to the vessel.
The goods are at the buyers risk thereafter and therefore they
should consider purchasing insurance from the time the goods have
been loaded to the vessel, including loading risk, transport until
received at final destination.
General CommentUse of this rule is restricted to goods
transported by sea or inland waterway. In practice it should be
used for situations where the seller has direct access to the
vessel for loading, e.g. bulk cargos or non-containerised goods.
For containerised goods, consider “Free Carrier FCA”.
IMPORT/EXPORT CLEARANCE - The seller is required to clear the
goods for export, if applicable, but not for import. The buyer is
responsible for import clearance and any applicable local taxes or
import duties.
For further information, please email [email protected] or
give us a call on 01628 532613
FREE ON BOARD (FOB – insert named port of shipment)Risk
transfers to the buyer at the point the goods are placed on board
the vessel at the port of shipment.
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
-
www.peterlole.co.ukT: +44 (0)1628 532613
E: [email protected]
A Guide to Incoterms Risk and Responsibilities
Carriage The seller is responsible for arranging and paying for
costs of carriage, export clearance and delivering the goods to the
named place of destination.
Delivery and Risk TransferDelivery of the goods takes place, and
risk transfers from seller to buyer, at the point the goods are
placed on board the vessel, i.e. before the main carriage takes
place.
Insurance The seller has no obligation to insure, but can if
they wish arrange insurance up to the point of goods being loaded
to the vessel.
The goods are at the buyers risk thereafter and therefore they
should consider purchasing insurance from
the time the goods have been loaded to the vessel, including
loading risk, transport until received at final destination.
General CommentUse of this rule is restricted to goods
transported by sea or inland waterway. In practice it should be
used for situations where the seller has direct access to the
vessel for loading, e.g. bulk cargos or non-containerised goods.
For containerised goods, consider ‘Carriage Paid To CPT’.
IMPORT/EXPORT CLEARANCE - The seller is required to clear the
goods for export, if applicable, but not for import. The buyer is
responsible for import clearance and any applicable local taxes or
import duties.
For further information, please email [email protected] or
give us a call on 01628 532613
COST AND FREIGHT (CFR – insert named port of destination)Risk
transfers to the buyer at the point the goods are placed on board
the vessel at the port of shipment. The seller pays for the
carriage to the named port of destination.
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
-
www.peterlole.co.ukT: +44 (0)1628 532613
E: [email protected]
A Guide to Incoterms Risk and Responsibilities
Carriage The seller is responsible for arranging and paying cost
of carriage to the named port of destination.
Delivery and Risk TransferDelivery of the goods takes place, and
risk transfers from seller to buyer, at the point the goods have
been loaded on board the vessel, i.e. before the main carriage
takes place.
Insurance The seller arranges and pays for insurance for the
goods for carriage to, at least, the named port of destination. The
rule only requires a minimum level of cover under Institute Cargo
Clause (C), which may be commercially unrealistic. Therefore, the
level of cover may need to be addressed elsewhere in the commercial
agreement.
The goods are at the buyers risk thereafter and therefore they
should consider purchasing insurance from the
time the goods are delivered at the named port of destination
until received at final destination.
The buyer can ask the seller to arrange insurance to the final
delivery point at destination.
General CommentUse of this rule is restricted to goods
transported by sea or inland waterway. In practice it should be
used for situations where the seller has direct access to the
vessel for loading, e.g. bulk cargos or non-containerised goods.
For containerised goods, consider ‘Carriage and Insurance Paid
CIP’.
IMPORT/EXPORT CLEARANCE - The seller is required to clear the
goods for export, if applicable, but not for import. The buyer is
responsible for import clearance and any applicable local taxes or
import duties.
For further information, please email [email protected] or
give us a call on 01628 532613
COST, INSURANCE AND FREIGHT (CIF – insert named port of
destination)Risk transfers to the buyer at the point the goods are
placed on board the vessel at the port of shipment. The seller pays
for the carriage to the named port of destination and insures the
goods whilst at the buyers’ risk under a minimum level of Institute
Cargo Clauses (C).
EXW
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FCA
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CPT
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIP
COSTSRISKS
COSTSRISKS
INSURANCE
Exportformalities
Importformalities
DAP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DPU
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
DDP
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FAS
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
FOB
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CFR
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
CIF
COSTSRISKS
COSTSRISKS
Exportformalities
Importformalities
INSURANCE
-
www.peterlole.co.ukT: +44 (0)1628 532613
E: [email protected]
A Guide to Incoterms Risk and Responsibilities
Insurance In general, most of the rules are silent on the matter
of insurance – the buyer and the seller each decide whether they
wish to insure the cargo for that part of the journey for which
they bear the risk of loss or damage. The Incoterm rules deal with
the seller’s obligation to take out insurance to the benefit of the
buyer only under CIP and CIF terms where goods are intended to be
sold in transit. In both cases, the seller is required to buy cargo
insurance covering the portion of the journey where the seller is
“off risk”, once the goods have been delivered to the carrier.
The 2020 Incoterms have brought in a significant change to the
previous rules in terms of the insurance coverage. Under the 2010
Rules both CIP and CIF terms required that the seller take out
insurance on minimum terms of Institute Cargo Clauses (C) which
provides only for loss or damage resulting from a specified list of
major perils such as fire, explosion, vessel sinking or grounding,
overturning of land conveyance, vessel collision and jettison. This
would often not be suitable for the buyer’s requirements and
ideally the level of insurance should have been amended as part of
the sales contract although this rarely occurred.
Whilst it is still felt that this minimum level is still
suitable for CIF sale terms, which the Chamber feel are intended to
apply more to commodity trades and bulk cargoes, the requirement
for CIP terms applying to all modes of transport has been widened
and now require the seller to provide cover for all risks of
physical loss and damage in accordance with Institute Cargo Clauses
(A) rather than the restricted major perils cover.
In practice most insurances are arranged under Institute Cargo
Clauses (A) but the buyer should be aware that cover may cease at
the port of arrival rather than
continuing until the final delivery point. Also, if you are
arranging insurance for used or unpacked goods you may need to
check the terms of the insurance as it is not uncommon for cover to
be provided on a restricted basis under Institute Cargo Clauses (C)
and likewise where goods shipped on deck which are not fully
containerised. In these cases, you may need to advise Insurers of
the Incoterm requirement and negotiate a change in the standard
cover offered.
It is common that the more well known CIF term is applied to
modes of transport other than seafreight, which should more
correctly have the CIP term applied, and this can therefore lead to
a case of buyer beware as it would be beneficial for the buyer to
ensure the correct CIP term is applied to benefit from the new 2020
widened insurance requirement.
If goods are not intended to be sold in transit, it is natural
for the parties to arrange their own insurance, should they so
wish, in order to protect them for their own risk. The Seller can
protect himself for risks of loss or damage to the goods up to the
point they are at risk, agreed point of delivery according to the
F, C or D term. There is no need for the seller to insure goods
sold Ex Works EXW. The buyer should then arrange their own
insurance from the point of delivery where they are at risk.
It is the contractual delivery point under the Incoterm, the
point at which risk transfer takes place, which should be
established when buying insurance cover so as to establish that the
party has an insurable interest (risk) in the goods otherwise the
cover may be invalid.
If you need help to establish the Insurable Interest do always
contact your insurance provider.
For further information, please email [email protected] or
give us a call on 01628 532613