An Overview of

Presented by:
Andrew Docherty
Customs and Global Trade Consultant

On Behalf Of - IIFA,
Davenport Hotel Thursday 21st October 2010
 The main issue people have with Incoterms =
They are not applied correctly
 Whether it is a first time Importer / Exporter or a
established multinational company. Terms are
often misinterpreted or not fully followed through.
 Nine out of ten time this is not an issue as the
transaction runs smoothly one party wants the
goods the other want paid.

THEN.................................................
............Something goes
wrong.
“Was the Correct Term
Used?”
“Had Risk Passed?”
“Who is responsible for
Insurance?”
“What do you mean
Insurance clause C?”
“What was the named
place after the
INCOTERM?”
 For example:
 Seller contracts with Buyer to sell goods FOB (Dublin)
Incoterms 2010
 Payment by Letter of Credit
 Letter of Credit requires presentation of onboard bill of
lading

In reality:
 Seller arranges for goods to be delivered
 By truck by container
 To Dublin port
 Hands over custody of container at port’s container
terminal on unloading
 Receives a delivery receipt from the carrier
Problems:
 The seller cannot get paid
○ No onboard bill of lading

 Mismatch in risk transfer:

○ Under FOB risk passes on loading onto ship
○ But seller lost control on unloading from truck

 Terminal handling charges

○ Handling and loading charges
○ Buyer can recharge seller
○ To seller’s surprise
Solution:
 Use FCA

 Check you can obtain the documents called for in

the Letter of Credit

“FOB may not be appropriate where goods are

handed over to the carrier before they are on
board the vessel, for example goods in containers,
which are typically delivered at a terminal. In such
situations, the FCA rule should be used”
 From 13 in 2000 to 11 in Incoterms 2010.
Take special note of the FAS FOB CFR CIF these are Sea and Inland Waterway
Transport ONLY Terms
Overview of former Incoterms rules Equivalent Equivalent
Incoterms® 2000 rule Incoterms® 2010 rule
ex factory, ex mill, ex plantation, ex warehouse, ex EXW EXW
store, etc.
Free Carrier (FRC)
FOR (Free On Rail) - FOT (Free On Truck) - Franco
Wagon FCA FCA
FOB Airport (FOA)
FOQ (Free on Quay)
FOW (Free on Wheels)
C.And F.
C&F CFR CFR
C+F
CF
CAF CIF CIF
Freight or Carriage Paid to (FCP) CPT CPT
Freight or Carriage and Insurance Paid to CIP CIP

DAF

Ex Ship (EXS) DES DAP

DDU

Ex Quay (EXQ) DEQ DAT

 Maritime Incoterms rules have been made
secondary.

 Consolidation of the “D” Rules

 Any Mode of Transport
 More Container Friendly

 Ships rail is abolished – makes FOB more flexible.

 Less specific Documents (e.g. CPT)

DAF (Named DAP
place) (Named place of
destination)
DES...............
DAP
named port of
(Named place of
destination)
destination)
 DAT (Named terminal
DEQ (…....... at port or at place of
named port of destination)
destination)
DDU (Named
place)

DAP (Named place

of destination)

DAT (Named
terminal at port or
at place of
destination)
 Structure of the Incoterms®
rules: 10 articles

A THE SELLER’S OBLIGATIONS B THE BUYER’S OBLIGATIONS

 General obligations of the seller  General obligations of the buyer

 Licences, authorizations, security
clearances and other formalities
 Contracts of carriage and insurance
 Delivery
 Transfer of risks
 Division of costs
 Notice to the buyer
 Delivery document
 Checking – packaging – marking
 Assistance with information and
related costs
 Licences, authorizations, security
clearances and other formalities
 Contracts of carriage and
insurance
 Taking delivery
 Transfer of risks
 Division of costs
 Notice to the seller
 Proof of delivery
 Inspection of goods
 Assistance with information and
related costs
Thank you for your time..........Any Questions?