INTERNATIONAL TRADE

INTERNATIONAL COMMERCIAL TERMS or

INCOTERMS

The exporter sends price quotations to the foreign buyer in order to

obtain an export order. He has to mention the terms of delivery like
Ex-Works , F.O.B , or C & F etc. which indicates who pays for
what cost in the course of transportation the goods.
The International Chamber of Commerce of Commerce have
identified 13 such
Delivery terms known as INCOTERMS . The INCOTERMS define
the obligation of the buyer and seller during the transportation.
Some important INCOTERMS are described below with their
international codes such as Ex-works, F.O.B, C & F, CIF etc.
INCOTERMS
 Ex Works (……..named place) EXW

Exporter undertake to pay for all the

expenses to make the goods available
at his premises the importer bears all
costs and risks involved in taking the
goods from the exporter’s premises to
the desired destination.
INCOTERMS
 Free Carrier (……named port) FCA

Exporter fulfills his obligation to deliever

when he hands over the goods, cleared
for export, into the charge of the carrier
named by the importer at the named
place or point.
INCOTERMS
 Free Alongside Ship(……..named port
of shipment) FAS
Exporter fulfills his obligation to
deliver when the goods have been
placed alongside the vessel on the
quay or in lighters at the named port
of shipment. The term is used only for
sea or inland waterway transport.
INCOTERMS
 Free on Board(FOB)

Exporter fulfills his obligation to deliver

when the good have passed over the
ship’s rail at the named port of shipment.
The importer has to bear all costs and
risks of loss or damage after the goods
have been loaded on board the ship.
INCOTERMS
 Costs on Freight (.named port of
destination) CFR or C&F
Exporter must pay the costs
and freight necessary to bring the goods to
the named port of destination. The risks of
loss or damage to the goods as well as any
additional costs due to events occurring
after the time the goods have been
delivered on board the vessel is transferred
from the exporter to the importer.
INCOTERMS
 Cost, Insurance and Freight (……
named port of destination) CIF
Exporter has the obligation to
procure marine insurance against the
importer risk of loss or damage to the
goods during the carriage in addition
to the obligation of CFR.