02. Incoterms
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Tutorial : II
Everything To Know
About Incoterms
What are Incoterms?
 The abbreviation of Incoterms is ‘International Commercial Terms’.
  An Incoterms represents a universal term that defines a transaction 
between importer and exporter, so that both parties understand the 
tasks, costs, risks and responsibilities.
 Incoterms 2020 includes 11 Incoterms derived by International 
Chamber of commerce
Responsibilities And Obligations
 Defined In Incoterms 
  Point Of Delivery : Here, The Incoterms Defines The Point Of Change 
Of Hands From Seller To Buyer.
  Transportation Costs: Here, The Incoterms Defines Who Pays For 
Whichever Transportation Is Required.
  Export And Import Formalities: Here, Incoterms Defines Which Party 
Arranges For Import And Export Formalities.
  Insurance Cost: Here, Incoterms Define Who Takes Charge Of The 
Insurance Cost.
History of Incoterms
 
  In 1812, Modern-day Incoterms, date back to the creation of the first FOB 
term
  In 1895, CIF Term was created
 
  In 1976, the ICC created new Incoterms, which included air transportation
 
  In 1990 new Incoterms were created to suit intermodal transport. The 
Incoterms numbered 13 at terminal
History of Incoterms
  In 2010, the number of Incoterms decreased to 11. These Incoterms were 
put into effect January 1, 2011. The latest changes removed four Incoterms 
(DAF, DEQ, DES, DDU) while creating two new Incoterms: DAT (Delivery At 
Terminal) and DAP (Delivery At Place).
 In 2020 , new Incoterms were created with a few key updates and changes.  
The main change includes a new DPU(Delivered at place unloaded) term 
replacing DAT (Delivered at terminal).
Incoterms – 2020
Incoterms – 2020
EXW – Ex-Works  or Ex-Warehouse
   Ex Works Is When The Seller Places The Goods At The Disposal Of  
 The Buyer At The Seller’s Premises Or At Another Named Place (I.E., 
 Works, Factory, Warehouse, Etc.)
   The Seller Does Not Need To Load The Goods On Any Collecting   
Vehicle. Nor Does It Need To Clear Them For Export, Where Such   
Clearance Is Applicable.
Incoterms – 2020
FCA – Free Carrier
   The Seller Delivers The Goods To The Carrier Or Another Person  
Nominated By The Buyer At The Seller’s Premises Or Another  
Named Place.
   The Parties Are Well Advised To Specify As Explicitly As Possible  
The Point Within The Named Place Of Delivery, As The Risk Passes  
To The Buyer At That Point.
Incoterms – 2020
FAS – Free Alongside Ship
   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   
Products Are Alongside The Ship.  The Buyer Bears All Costs From  
That Moment Onwards.
Incoterms – 2020
FOB – Free On Board
   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  
Products Are On Board The Vessel. The Buyer Bears All Costs From  
That Moment Onwards.
Incoterms – 2020
CFR – Cost and Freight
   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  
Products 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.
Incoterms – 2020
CIF – Cost, Insurance and Freight
   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 
Products Are On The Ship.
   The Seller Must Contract For And Pay The Costs And Freight Necessary To Bring The 
Goods To The Named Port Of Destination.
   The Seller Also Contracts For Insurance Cover Against The Buyer’s Risk Of Loss Of Or 
Damage To The Goods During The Carriage.
   The Buyer Should Note That Under CIF The Seller Is Required To Obtain Insurance 
Only On Minimum Cover. Should The Buyer Wish To Have More Insurance 
Protection, It Will Need Either To Agree As Much Expressly With The Seller Or To Make 
Its Own Extra Insurance Arrangements.
Incoterms – 2020
CPT  – Carriage Paid To
   The Seller Delivers The Goods To The Carrier Or Another Person 
Nominated By The Seller At An Agreed Place (If Any Such Site Is Agreed 
Between Parties).
   The Seller Must Contract For And Pay The Costs Of Carriage    
Necessary To Bring The Goods To The Named Place Of Destination.
Incoterms – 2020
CIP – Carriage And Insurance Paid To
  The Seller Has The Same Responsibilities As CPT, But They Also   
Contract For Insurance Cover Against The Buyer’s Risk Of Loss Of Or 
Damage To The Goods During The Carriage.
   The Buyer Should Note That Under CIP The Seller Is Required To 
Obtain Insurance Only On Minimum Cover. Should The Buyer Wish To 
Have More Insurance Protection, It Will Need Either To Agree As Much 
Expressly With The Seller Or To Make Its Own Extra Insurance 
Arrangements.
Incoterms – 2020
DAP – Delivered At Place
  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.
Incoterms – 2020
DPU – Delivered At Place Unloaded 
(replaces Incoterms® 2010 DAT)
  DPU Replaces The Former Incoterms® DAT (Delivered At 
Terminal).  The Seller Delivers When The Goods, Once Unloaded 
Are Placed At The Disposal Of The Buyer At A Named Place Of 
Destination.
   The Seller Bears All Risks Involved In Bringing The Goods To, And  
Unloading Them At The Named Place Of Destination.
Incoterms – 2020
DDP – Delivered Duty Paid
  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 The Costs And Risks Involved In Bringing The  
Goods To The Place Of Destination.  They Must Clear The Products   
Not Only For Export But Also For Import, To Pay Any Duty For Both  
Export And Import And To Carry Out All Customs Formalities.
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