Incoterms 2007-2008 (INternational COmmercial TERMS)

Mode of Transport and the Appropriate Incoterm 2007-2008

Suitable for Any Mode of Transport including Multimodal:

EXW – Ex Works (… named place)

FCA – Free Carrier (… named place)

CPT – Carriage Paid To (… named place of destination)

CIP – Carriage and Insurance Paid To (… named place of destination)

DAF – Delivered at Frontier (… named place of destination)

DDU – Delivered Duty Unpaid (… named place of destination)

DDP – Delivered Duty Paid (… named place of destination)

Suitable for Air Transport:

FCA – Free Carrier (… named place)

Suitable for Rail Transport:

FCA – Free Carrier (… named place)

Suitable for Sea and Inland Waterway Transport:

FAS – Free Alongside Ship (… named port of shipment)

FOB – Free On Board (… named port of shipment)

CFR – Cost and Freight (… named port of destination)

CIF – Cost, Insurance and Freight (… named port of destination)

DES – Delivered Ex Ship (… named port of destination)

DEQ – Delivered Ex Quay (… named port of destination)

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Incoterms 2007-2008

Division into four basic groups of term

The 13 terms are grouped into four basically different categories:

Group E: Departure Term

Where the seller makes the goods available to the buyer at the seller's own premises, (EXW).

Group F: Shipment terms - Main carriage unpaid

Where the seller is called on to deliver the goods to a carrier named by the buyer, (FCA, FAS and FOB). These are shipment contracts with the shipment point named, and carriage unpaid by the seller.

Group C: Shipment terms - Main carriage paid.

Where the seller has to contract for carriage, but without assuming the risk of loss of or damage to the goods or additional costs due to events occurring after shipment and dispatch, (CFR, CIF, CPT and CIP). These are shipment contracts with the destination point named, and carriage paid by the seller. These are two critical division points, one for the division of costs, the other for the division of risk. Costs being assumed by the seller until the destination point; risk being transferred to the buyer at the point of shipment. CIF and CIP are the only Incoterms related directly to insurance cover. In these the seller arranges the contract of carriage and payment of freight and is regarded as being in a better position than the buyer to arrange insurance.

Group D: Arrival Terms

Where the seller has to bear all costs and risk needed to bring the goods to the country of destination, (DAF, DES, DEQ, DDU and DDP). These are arrival contracts.