L IE S A N D LO G I ST IC S

PROJE C T SU P P
M A NA G E M E N T
IN CO TE RM S
GROUP 4 MEMBERS
NAMES REGISTRATION
NUMBER
TUGUME NELSON 2021/HD10/22868U
APIO ESTHER 2021/HD10/22606U
NAKANWAGI EMILLY 2021/HD10/22783U
NAKIZIYIVU SANDRA 2021/HD10/22786U
DEFINITION OF INCOTERMS
• International Commercial Terms—incoterms for short—clarify the rules and terms that buyers
and sellers use in international and domestic trade contracts.
• Incoterms are a set of internationally recognized rules which define the responsibilities of sellers
and buyers in the export transaction.
DEFINITION OF INCOTERMS
• To facilitate commerce around the world, the international chamber of commerce (ICC) publishes
a set of incoterms, officially known as international commercial terms. globally recognized,
incoterms prevent confusion in foreign trade contracts by clarifying the obligations of buyers
and sellers.
• Parties involved in domestic and international trade commonly use incoterms as a kind of
shorthand to help understand one another and the exact terms of their business arrangements.
some incoterms apply to any means of transportation, while others apply strictly to transportation
across water
IMPORTANCE OF INCOTERMS
• Incoterms were created with the objective to set a unified criteria regarding the responsibilities
and obligations to which seller and buyer of goods agree beforehand so  they know at all times
who must bear with what costs or risks.  this helps reduce confrontation and misunderstandings
between traders and in turn minimize trade disputes and litigation. furthermore, a good
knowledge of incoterms can help save money derived from, for example, delays or mishandling
of the goods.
RESPONSIBILITIES AND OBLIGATIONS
• incoterms are all the possible ways of distributing responsibilities and obligations
between two parties.
These responsibilities and obligations include
• point of delivery
• transportation costs:
• export and import formalities:
• insurance costs
CLASSIFICATION OF INTERCOMS
 The International Chamber of Commerce(ICC) grouped the updated incoterms 2020 into two simpler
categories:
• Rules for any means of transport include;
EXW-Ex-works
FCA –Free carrier
CPT-Carriage Paid To
CIP-Carriage and Insurance paid to
DAP-Delivered at Place
DPU-Delivered at place Unloaded
DDP-Delivered Duty Paid
CLASSIFICATION OF INTERCOMS
Rules for sea transport include;
FAS- free alongside ship
FOB-free on board
CFR-cost and freight
CIF-cost, insurance and freight
FACTORS CONSIDERED WHEN CHOOSING INCOTERMS
Environmental factors :
• International experience
• Shipment value,
• Habits and practices of the organization,
• Financial resources of the organization,
• Chosen mode of transportation
• Client’s characteristics,
• Country risk,
• Competitive intensity
• Regulations of the destination country
FACTORS CONTINUED…
• Distance between countries
• Transport costs
• Complexity of transport
• Type of goods
• Whether shipments will be made on domestics or foreign carrier
• Insurance coverage availability
• Information cost availability
• Exporter need for cash
• Currency convertability problem
• Bargaining Power