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Incoterms 2020
EDS has extensive experience in Incoterms®, which define who is responsible for what in international transactions.
- Personal service 365 days a year
- Years of experience
EDS has extensive experience in Incoterms®, which define who is responsible for what in international transactions.
- Personal service 365 days a year
- Years of experience
What are incoterms?
Incoterms are international trade terms and are an abbreviation for International Commercial Terms. Titles were first published in 1936 and are a set of 11 regulations that define who is responsible for what in international transactions. The latest update to the rules is Incoterms® 2020 and includes the Incoterms for 2022.
The most common trade terms are EXW incoterms, CFR incoterms and DAP incoterms. EDS has extensive experience with Incoterms, which describe who bears the risk during transport, who must pay the costs and what obligations the buyer and seller have. By following these terms, sellers and buyers can avoid unnecessary misunderstandings regarding the goods.
The Incoterms 2020 regulations are the world’s most essential trade terms for the trade of goods. Regardless of whether you are a seller or a buyer, the Incoterms® rules are there to guide you through the trade. The regulations provide specific guidance to companies that participate in the import and export of global trade on a daily basis. There is no ready-made template for which delivery terms are right to use, as it depends on what the buyer and seller prioritize. In addition, some Incoterms only apply to sea freight.
When do Incoterms not apply?
There are five main aspects of an international sales contract where the Incoterms® rules do not apply and that is when the conditions specified in the contract between the carrier and the buyer/seller, the conditions for transfer of ownership of the goods, payment conditions – including the price of the goods and the payment methods used to complete sales transactions, the terms governing a breach of contract, including how it is to be resolved and any exclusions from liability in respect of the condition and delivery of the goods. Another area that is not covered is the marketing of goods and services. This is important to remember in the event of a breach of contract. These aspects must be properly defined in the purchase agreement so that both the buyer and the seller can review them and mutually agree on the terms stated.
Incoterms with EDS
The Incoterms® rules are not mandatory. The conditions are hugely important and crucial for every operation in the supply chain to function correctly and efficiently. By having EDS as a partner, you don’t have to worry about misunderstandings with your delivery. EDS is an innovative logistics company that challenges traditional transport companies with complete, dedicated logistics solutions. We are available for personal support around the clock. EDS provides everything from global logistics projects to customs management. We advise you on incoterms and are with you from start to final delivery.
Incoterms group 1: All transport
EXW incoterms, the risk passes when the goods are made available to the buyer at the specified location (the goods have not yet been loaded for transport). It is the buyer who is responsible for all costs and is responsible for everything in EXW incoterms.
FCA incoterms mean that the seller’s obligations end when the goods are delivered to and placed at a pre-agreed location. The seller is responsible for the costs up to the agreed delivery location including loading on the first transport. The buyer is responsible for the transport agreements, export licenses and customs formalities.
New for FCA incoterms 2020 is that the Transport Company can receive instructions from the buyer to issue a bill of lading (Bill of lading), which the seller must show to the buyer.
CPT incoterms means that the risk is transferred when the goods have been handed over to the carrier. The seller is responsible for the costs until the goods have arrived at the destination (the goods have not yet been unloaded). In CPT incoterms, the seller is responsible for export licenses and customs formalities, transport agreements and loading.
Guide: Incoterms®: CPT 2020With CIP incoterms, the risk passes when the goods have been handed over to the carrier. The seller is responsible for the costs (including insurance at the buyer’s risk) until the goods have arrived at the specified destination (the goods have not yet been unloaded). The seller is responsible for export licenses and customs formalities, transport and insurance contracts and loading.
New to CIP incoterms 2020 is that the buyer can ask for insurance under Institute Cargo Clauses B or A, as well as war and / or strike insurance, but must pay the difference between the cost of a C insurance.
DAP incoterms, the seller is responsible until the goods have been delivered to the specified place of destination, ready for unloading. The seller is responsible for the costs up to the specified destination (the goods have not yet been unloaded). The seller is responsible for export licenses and customs formalities, transport agreements and loading in DAP incoterms.
In DPU incoterms, the risk passes from the seller to the buyer when the goods have been delivered to the specified place of arrival at the destination, ready for unloading. The seller is responsible for the costs up to the agreed place of arrival (the goods have been unloaded). The seller handles export licenses and customs formalities, transport agreements and loading / unloading.
DPU IncotermsIn DDP incoterms, the seller bears the risk until the goods have reached the specified place of arrival and are ready for unloading. The seller is responsible for the costs up to the agreed place (the goods have not yet been unloaded). In DDP incoterms, the seller handles export licenses and customs and import formalities, transport agreements and loading.
Incoterms group 2: Sea freight
In FAS, the risk is transferred from the seller to the buyer when the goods are delivered on a quay or a barge (alongside the vessel) in the specified port.
The buyer is responsible for the agreed place, that the goods are unloaded and placed on the quay ready to be loaded on board the vessel. The buyer is responsible for export licenses and customs formalities, transport agreements and loading.
At FOB, the risk is transferred to the buyer when the goods are loaded on board the vessel at the agreed loading port. The seller is responsible for the costs until the goods are loaded on board the ship. The seller exports the goods.
With CFR, the risk is transferred from the seller to the buyer when the seller delivers the goods on board the vessel. The seller is responsible for the costs until the goods have arrived at the specified port of destination. If unloading costs are included in the shipping cost, the seller is responsible for this. The seller is responsible for export licenses and customs formalities, transport agreements and loading.
In the case of CIF, the buyer is responsible from the time the goods are loaded on board the vessel in the agreed loading port. The seller is responsible for the costs until the goods have reached the specified port of destination. If unloading costs are included in the shipping cost, the seller is responsible for this. The seller is responsible for export licenses and customs formalities, transport and insurance contracts and loading.
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