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Complete Shipper Guide: Introduction Incoterms 2010

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Shippers Guide


Week by week we are going to publish our complete shipper guide with all basic topics shippers must know.

We start with Incoterms due it is one of the basics to any person, company wants to start selling or shipping.

Our mission with this guide is helping all shippers or any person interested in the Freight Business.


Incoterms 2010 Defenition


The International Commercial Terms, or more commonly known as Incoterms, is a complete series of well defined and regulated commercial terms that are published by the International Chamber of Commerce

The Incoterms are related directly to the international commercial laws. 

These terms are greatly utilized in international transactions that are commercial as also in processes of procurement. The usage of these terms is widely encouraged by international lawyers, courts and trade councils. 

The Incoterms are a list of three-letter terms of trade that are related to commonly used contractual sales practices. 

The rules of Incoterms were constituted mainly to clearly communicate the risks, overall costs and important tasks that are generally associated with the international or global transportation and also the delivery of the goods.

The Incoterms are informative of the contract of sales that define respective obligations, risks, and costs that are usually involved in the delivery of the goods from the seller to the buyer. 

The Incoterms, however, cannot in themselves conclude a contract or finally determine the payable price or even the credit and currency terms. 

The Incoterms also cannot govern the contract laws. 

The rules of Incoterms are generally accepted by legal authorities, governments, and practitioners globally to zero in on the interpretation of the very commonly used terms in international trade. 


History of Incoterms 2010


They are originally intended to bring down or completely remove any kind of uncertainty or confusion that would arise from the difference in the interpretation of the rules in the different countries. 

Hence, they are regularly incorporated into international sales contracts. Incoterms 2010 is the eighth set of the easily defined international contract terms that are published through the International Chamber of Commerce. 

The first set of such terms had been issued first in the year 1923 and the first published works came way back in the year 1936. 

The Incoterms rules have been amended in the years 1953, 1967, 1976, 1980, 1990, 2000 and then finally 2000. This final set was published on January 1, 2011. 

The Incoterms 2010 sets out 11 rules, which are down from the 13 rules that had been defined by Incoterms 2010. 

Four rules of the year 2000 version had been removed completely and two new rules had been added while publishing Incoterms 2010. 

In the earlier versions, the rules had been classified into four categories, but the 11 pre-defined terminologies of Incoterms 2010 are broadly divided into two categories which are classified only on the method of delivery. 

The larger collection of seven rules can be easily used without consideration of the kind of transport used, and the smaller group of four rules are mostly applicable only to transactions that involve transportation through water, where the nature and the condition of the goods can be checked and verified at the place where the loading is taking place, or even on board the ship. Incoterms, however, do not apply to service contracts or set out remedies for breach of contract. They also do not set out ownership or title transfer to the goods in transit. 

They also do not protect parties from their own loss or risk. Thus the Incoterms 2010 rules have become a very essential part of the language in which international trade is conducted and are being incorporated by entities and individuals involved in the shipment and trade of goods globally.


Types of Incoterms


Rules for any mode of transport


1 EXW – Ex Works (named the place of delivery)

Incoterms 2010, EXW Ex-Works


2 FCA – Free Carrier (named the place of delivery)
3 CPT – Carriage Paid To (named place of destination)
4 CIP – Carriage and Insurance Paid to (named place of destination)
5 DAT – Delivered At Terminal (named terminal at port or place of destination)
6 DAP – Delivered At Place (named place of destination)
7 DDP – Delivered Duty Paid (named place of destination)


Rules for sea and inland waterway transport


1 FAS – Free Alongside Ship (named port of shipment)
2 FOB – Free on Board (named port of shipment)
3 CFR – Cost and Freight (named port of destination)
4 CIF – Cost, Insurance & Freight (named port of destination)


Next Week EXW

We will now start to detail one by one all the Incoterms 2010. Next week we will start with EXW.




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