Incoterms terms

How does Incoterms help traders in international trade?

Incoterms is divided into 4 groups, each of which helps traders identify the procedures for transporting and delivering goods and understand their responsibilities, costs, and risks. In the following, we will introduce the procedures for delivering goods for import and export in foreign trade.

Exw (delivery of goods in warehouse to buyer) : In this method, the exporter delivers the goods to the importer in the warehouse or factory at the origin. In this method, all costs such as domestic and international shipping costs, customs formalities at the origin, as well as insurance costs, are borne by the buyer, and the exporter transfers all responsibilities to the buyer. In this term, the exporter's risk is low and the importer's risk is high.

FCA (Delivered to carrier at named place of origin, place on board the vehicle) : In this method, the costs and risk are transferred to the importer after the goods are delivered at the named place of origin. The risk of this method is low for the exporter and high for the importer.

FAS (Free Alongside Ship at Named Port of Origin) : The place of delivery of the goods is to the importer and the risk is transferred from the seller to the buyer alongside the ship. In this method, transportation and insurance are with the importer.

FOB (Free on Board at the Port of Origin): In this method, the exporter delivers the goods to the importer on board the ship at the port of origin and the risk is transferred from the exporter to the importer. In this method, all the exporter's costs until the goods are delivered on board the ship are covered, and after delivery, all the costs are covered by the importer. In this term, the cost of international transportation and insurance is covered by the buyer of the goods.

CFR (Cost and Freight to the Named Port of Destination) : This method, which is specific to sea transportation, is the responsibility of the exporter, and the seller delivers the goods to the importer on board the ship at the port of destination, and all import and export costs at the port of destination are the responsibility of the importer.

CIF (Cost, Insurance and Freight to the Named Port of Destination) : In this Incoterms term, the exporter delivers the goods to the importer on board the ship at the named port of destination. This Incoterms term is also specific to sea transport, in which the cost of transportation and insurance to the named port of origin is the responsibility of the exporter.

CPT (Carriage Paid to a Named Place of Destination by Land, Air, or Rail) : This term of Incoterms is specific to land and air transportation, and the exporter of the goods is responsible for the transportation costs to the named place of destination, and the insurance costs are also borne by the importer.

CIP (Carriage and Insurance Paid to a Named Place of Destination, One of the Land, Air, or Rail Customs) : In this Incoterms term, the exporter of the goods is responsible for paying the transportation and insurance costs to a named place of destination, which is one of the land, air, or rail customs, and the importer receives the goods at the named place of destination. The inspection contract is concluded with the buyer in all procedures.

DES : The exporter delivers the goods to the importer on board the ship at the destination, and the importer is responsible for clearing the goods and carrying out customs formalities at its destination.

DAP (Delivered at Place (Named Place of Destination) : The exporter delivers the goods to the importer at the named place of destination. In this term of Incoterms, all responsibilities and transportation costs and import and export costs are with the exporter.

DDP (Delivered Duty Paid) : In this term of Incoterms, the exporter, in addition to being responsible for all transportation costs to the specified place of destination, is also responsible for paying import and export taxes in the destination country.

What is the advantage of using Incoterms?

Incoterms help exporters and importers to clarify their duties and responsibilities towards each other, making the international trade process faster for them, allowing them to have targeted negotiations, and preventing disputes in the trade process.

Conclusion :

In this article, we talked about Incoterms and its terminology, and we also understood its advantages, but the question that arises is: How do we use it?

In response to this question, you can inform the buyer of your desired term in the comondealz international portal, and also specify your price in different terms and enter it in the prices section. This will help the importer to know the export conditions of your goods and make subsequent negotiations easier for you.