Incoterms 2020 CLCKT Term 2 2021

INTERNATIONAL COMMERCIAL TERMS
- First published in1936 by International Chamber of Commerce
- Up to now, Incoterms was updated 6 times.
- Current version of Incoterms was published in 2019, came into effect in January, 2020.
INCOTERMS 1936
7 Terms
• EXW (Ex Works) – Giao tại xưởng

• FAS (Free Alongside Ship) – Giao dọc mạn tàu
• FOB (Free On Board) – Giao lên tàu
• C&F (Cost and Freight) – Tiền hàng và cước phí
• CIF (Cost, Insurance, Freight) – Tiền hàng, bảo hiểm và cước phí
• Ex Ship - Giao hàng tại tàu
• Ex Quay - Giao hang tại cầu cảng
Incoterms 1936 is mainly used to explain terms related to road and marine transportation
INCOTERMS 1953
10 Terms

• FOB (Free on Board) – Giao lên tàu
• Ex Ship – Giao tại tàu
• Ex Quay – Giao tại cầu cảng
• Ex Works - Giao hàng tại xưởng
• DCP (Delivered Cost Paid) - Giao hàng chi phí đã trả
• FOR (Free on Rail) - Giao hàng lên tàu hoả
• FOT (Free on Truck) - Giao hàng lên xe tải
INCOTERMS 1953 (first updated in 1967)
11 terms

• FOB (Free on Board) – Giao lên tàu
• Ex Ship – Giao tại tàu
• Ex Quay – Giao tại cầu cảng
• Ex Works - Giao hàng tại xưởng
• DCP (Delivered Cost Paid) - Giao hàng chi phí đã trả
• FOR (Free on Rail) - Giao hàng lên tàu hoả
• FOT (Free on Truck) - Giao hàng lên xe tải
• DAF (Delivered At Frontier) – Giao tại biên giới
• DDP (Delivered Duty Paid) – Giao hàng tại đích thuế đã nộp
INCOTERMS 1953 (second update in 1974)
12 terms

• FCA (Free Carrier) – Giao cho người chuyên chở
• FOT/FOR (Free on Rail / Free on Truck) – Giao lên tàu hỏa
• DES (Delivered Ex Ship) – Giao tại tàu
• DEQ (Delivered Ex Quay) – Giao tại cầu cảng
• FOA (Free on Airport) – Giao hàng lên máy bay
INCOTERMS 1980
14 terms

• CPT (Carriage Paid To) – Cước trả tới
• CIP (Carriage Insurance Paid To) – Cước, bảo hiểm trả tới
INCOTERMS 1990
13 terms

• CPT (Carriage Paid To) – Cước trả tới
• CIP (Carriage Insurance Paid To) – Cước, bảo hiểm trả tới
• DDU (Delivered Duty Unpaid) – Giao hàng tại đích thuế chưa nộp
INCOTERMS 2000
• Incoterms 2000 giữ nguyên 13 điều kiện như Incoterms 1990 nhưng sửa đổi nội dung 3 điều
kiện FCA, FAS và DEQ.
INCOTERMS 2020
• Section A6 / B6 (FCA): The seller or buyer may negotiate on board B/L

• Increasing obligation to buy insurance from sellers (condition A - maximum is not necessarily C)
• FCA, DAP, DDU and DDP: sellers can transport goods by their means (in case of goods supplier
is logistics provider)
• DAP (not unloaded) appears before DAT. DAT changed to DPU (delivered at place unloaded).
DPU: delivery location can be anywhere but not a terminal
• The cost division between the two parties is intensively presented, not discretely presented like the
previous versions.
• Explain the user guide in more detail: illustrations
THE PURPOSE OF INCOTERMS?
- Simplify terms in foreign trade.
- Replace deals related to the merchandise trade.
- Are not intended to govern the terms of service contracts.
- Does not regulate acts related to the transfer of ownership.
- Does not adjust the breach of contracts.
- Does not protect parties from the risks of their own faults.
- Does not regulate risks and responsibilities related to goods before and after delivery.
- Does not regulate the responsibilities of parties involved in the contract of carriage, insurance and
finance.
INCOTERMS explains what?
- Warehouse (inventory cost)

- Packing: In conformity with contracts and modes of transport.
- Loading
- Local freight charges
- Demurrage charge: phí lưu container tại bãi
- Forwarder fee: dạng như là 1 loại phí phụ thu
- Freight or carriage
- Tax and customs fee
- Delivery is determined when risks pass from the Seller to the Buyer.
- Security clearance
Demurrage charge
container yard (C/Y)
Forwarder fees
Customs fees
taxes, tariff
Ship’s rail
Rights and obligations of both parties
• Loading on truck
• Export custom declaration
• Carriage to port of export
• Unloading of truck in port of export
• Loading charges in port of export
• Carriage to port of import
• Unloading charges in port of import
• Carriage to place of destination
• Insurance
• Import customs clearance
• Import taxes
1. EXW terms (Ex Works):
1. EXW terms (Ex Works: giao tại xưởng)
- The seller makes the goods available at his premises
- The buyer is responsible for all charges
- This trade term places the greatest responsibility on the buyer and minimum obligations on the
seller
- Making an initial quotation for the sale of goods without any costs included
- The seller delivers the good at seller's premise or named place (works, factory and warehouse,
etc.), but not loaded on collecting vehicles and not cleared for export
Seller’s premises
EXW’s pitfalls
• Ex Works obliges the buyer to undertake export procedures (obtaining of licenses, security
clearances and so on.)
• In any event the seller is only obliged to “provide assistance”, at the buyer’s risk and expense.
• From the seller’s perspective, there is the problem of obtaining evidence that the goods are to be
exported – where VAT or sales tax is charged on domestic sales, the tax authorities may require
this.
• The good must be placed at the buyer’s disposal (available to be used by someone)
• Forwarder’s bill of lading
A common mistake in using EXW
• Attempting to use EXW without thinking through the implications of the buyer being required to
complete export procedures – in many countries it will be necessary for the exporter to
communicate with the authorities in a number of different ways.
The modification of EXW
• EXW’s loaded
This price is understood FOB Hai Phong port as per Incoterms 2020
This price is understood EXW loaded Bac Giang as per Incoterms 2020
• Loaded at seller’s risk
• Loaded at buyer’s risk
EXW case study 1
• Firm A plans to export plastic lids to Cambodia under EXW contract, loading point is at the
warehouse of firm A.
• Question: Is firm A responsible for the unfulfillment of import customs procedure by the Buyer in
Cambodia?
EXW case study 2
• Firm A (importer) in Vietnam imports goods from the firm B (exporter) in Tan Thuan processing zone in HCM city.
However, firm A wants to receive goods at Singapore Binh Duong industrial zone (EXW Tan Thuan is specified in the
contract).
• On-spot export and on-spot import
• Question 1: Who will be responsible for the local freight from Tan Thuan processing zone to Vietnam Singapore
Industrial zone? => ờm firm A
• Question 2: At the behest of the authorities in the exporting country: Goods must be checked before delivery. Does the
Exporter have to be responsible for this fee? (hmm chắc là không vì the buyer is responsible for all export procedures)
• Checking goods, goods inspection, goods screening
• Vehicle registration
2. FCA term (Free carrier)
2. FCA – Free Carrier
- The Seller delivers goods to the carrier or a person nominated by the Buyer at the Sellers’ premises or
the other named place.
+ At the Seller’s premises: the Seller is responsible for loading
+ At any other place: the Seller is not responsible for unloading
- If the Buyer nominates a person to receive the goods, the Seller is deemed (considered) to have fulfilled
his obligation to deliver the goods when they are delivered to that person.
- The Seller must bear all risks of loss of or damage to the goods until such time as they have been
delivered to the Carrier at named place.
- ICD: inland container depot, seaport, airport (cảng cạn: trung tâm trung chuyển hàng hóa đường biển
đến các điểm đến trong nội địa)
FCA – PROOF OF DELIVERY
• The Seller must provide the buyer at the seller's expense with the usual proof of delivery of the
goods.
• Unless the document referred to in the preceding paragraph is the transport document, the Seller
must render the Buyer at the latter's request, risk and expense, every assistance in obtaining a
transport document for the contract of carriage (for example a negotiable bill of lading, a non-
negotiable sea waybill, an inland waterway document, an air waybill, a railway consignment note,
a road consignment note, or a multimodal transport document).
• When the Seller and the Buyer have agreed to communicate electronically, the document referred
to in the preceding paragraph may be replaced by an equivalent electronic data interchange (EDI)
message.
FCA – Inspection of goods (giám định hàng hóa)
• The Buyer must pay the costs of any pre-shipment inspection except when such inspection is
mandated by the authorities of the country of export.
=> người mua phải chi trả chi phí giám định hang hóa nếu những chi phí này được chỉ định bởi
chính quyền
• Inland container depot (ICD)

FCA – Checking – Packing – Marking
• The Seller must pay the costs of those checking operations (such as checking quality, measuring,
weighing, counting)
• The Seller must provide at his own expense packaging (unless it is usual for the particular trade to
send the goods of the contract description unpacked) which is required for the transport of the
goods, to the extent that the circumstances relating to the transport (for example modalities,
destination) are made known to the seller before the contract of sale is concluded.
• Packaging is to be marked appropriately.

MARKING
FCL/LCL: less container load
1. FCL (full container load)/CY (container yard):

Full Container Load (FCL)
Shipper’s responsibility
• Receive container at ports and ship it to the warehouse for loading goods.
• Loading goods into a container. Loading goods is implemented at the warehouse or at the port.
• Do marking
• Fulfill customs procedure
• Seal the outside of the container
• Sending details of B/L for the carrier
• Pay loading/unloading fees, THC fee ( phụ phí xếp dỡ tại cảng thu trên mỗi container), DEM/DET
fee.
The responsibility of the FCL carrier
• Issues a bill of lading and declare manifest for the shipper.
• Send draft B/L and B/L to shipper for checking the details.
• Load a container on board and secure container arrangement before the ship departs.
• Unloading a container and put it onto a port of destination.
• When goods arrives the port of destination, issues D/O (delivery order: lệnh giao hàng) and gives
it to the forwarder owing a valid B/L.
The responsibility of FCL consignee (người nhận hàng)
• Present a full set of shipping documents.
• Ships a container to the warehouse, unloading goods and gives a container back to the shipping
liner.
• Pay local charges, C/O (certificate of origin: chứng nhận xuất xứ), DET if necessary.
• Master B/L: Shipper: Real shipper/ Forwarder
Consignee: Real consignee/ Forwarder Agent
• House B/L: Shipper: real shipper
Consignee: real consignee
=> House b/l k liên quan mấy đến hang tàu mà chỉ giữa khách hàng và người trung gian
Mấ
BILL OF LADING
A bill of lading (sometimes abbreviated as B/L or BoL) is a document issued by a carrier

(supplier) (or his agent) (distributor) to acknowledge receipt of cargo for shipment. In British
English, the term relates to ship transport only, and in American English, to any type of
transportation of goods. => master b/l
A bill of lading must be transferable and serves three main functions:
- it is a conclusive receipt i.e. an acknowledgement that the goods have been loaded;
- it contains or evidences the terms of the contract of carriage; and
- it serves as a document of title to the goods

Freight to collect
FCL/LCL
2. LCL (less container load)/CFS (container freight station)
- Carrier
- Consolidator: a firm which groups together orders from different companies into one shipment
=> là cái th gom hàng của nhiều hang và 1 container tùy theo nguyện vọng
House bill issued by

forwarder
Original bill printed by Surrender bill printed by

forwarder and is sent to forwarder and is sent to
shipper Original B/L is shipper
reimbursed and
surrender B/L
Consignee
The responsibility of LCL shipper
- Packing goods, trucking them to the CFS (Container Freight Station), fulfill customs procedure.
- Providing detailed information for a consolidator to issues B/L.
- Certifying draft bill for an official B/L

The responsibility of a consolidator
• Fully responsible for goods shipment
• Provide house bill for his customer
• Goods notification and manifest notification

SURRENDERED B/L – Telex Release
- A Telex Release is a message that is sent by the agent or shipping line from origin to their agent or
office at destination to acknowledge that the shipper has surrendered the Original Bill of Lading that
has been issued to them. This allows the cargo to be released to the consignee without having to
physically present the Original Bill of Lading prior to release.
- A Telex Release is done in the event that the Original Bill of Lading cannot be mailed to the
destination in time for cargo release without the goods incurring storage charges, or it can be done to
save on mailing costs after payment is secured from the buyer.
B/L for FCA contract
(Clause 20 UCP600 and ISBP 745)
- Indicate the name of the carrier and the signature by:

+ A carrier or a nominated agent
+ Captain or an agent nominated for the captain
- Indicates that goods are received for shipment

- Indicates the date of loading goods.
If a B/L is "received for shipment", the date of issuance shall be deemed to be the date of delivery,
unless the bill of lading notes a separate loading day (separate loading day shall be deemed
delivery date) that is before or after the date of the B/L issuance.
Incoterm 2020: The seller can acquire an on board B/L

Surcharges
- THC: Terminal handling charge
- DEM: Demurrage
- DET: Detention
- D/O: Delivery order
- AMS: Advanced manifest system fee – about 25USD/BL
- CFS: Container freight station
- B/L amendment fee: From 50-100USD depending on the amendment made before or after the
dates of a ship’s arrival.
- BAF: Bunker adjustment factor
- BAF: Bulker adjustment factor: for European route
- EBS: Emergency bunker surcharge: for Asian route
- GRI: General rate increase
- Cleaning container fee
THC fee
- Terminal Handling Charges (THC) is the charges collected by terminal authorities at each port
against handling equipments and maintenance.
- THC varies port to port of each country, as the cost of handling at each port differs one to another
port, depends up on the total cost of port terminal handling at each location.
- Terminal handling charges (THC) for exports is collected from shipper by shipping lines while
releasing Bill of Lading after completion of export customs clearance procedures.
- The import terminal handling charges is collected by shipping carriers at the time of issuing
delivery order to consignee to take delivery of goods.
Terminal Handling Charges
FCL Import Local Charges
STT Loại phí Đơn vị Loại tiền 20’GP 40’DC 40’HC
1 D/O fee- phí lệnh giao hàng Set VND 700,000 700,000 700,000
2 THC fee-phí xếp dỡ tại cảng cont VND 2,200,000 3,450,000 3,450,000
3 CIC fee-phí chuyển rỗng cont VND 1,150,000 2,300,000 2,450,000
4 Cleaning fee-phí vệ sinh cont cont VND 120,000 240,000 240,000
5 Handling fee-phí làm hàng shipment VND 600,000 600,000 600,000

LCL Import Local Charges
STT Tên loại phí Đơn vị Loại tiền Đơn giá
1 Delivery Order Fee – phí lệnh giao hàng Set VND 700,000
2 CFS charge – phí bốc xếp cảng đến CBM VND 460,000
3 Destination THC – phí xếp dỡ cảng đến CBM VND 184,000
4 CIC fee – phí cân bằng container CBM VND 115,000
5 Handling fee – phí làm hàng Shipment VND 690,000

DEM/DET fee
Free time
DEM DET
Container at port Container
warehouse
DELIVERY ORDER
- Delivery order is the document which details the delivery information of an item, is very important
in distribution. A delivery order is an important document in 2 ways: it has full details of how the
delivery will take place and, in some cases, warrants the release of a shipment from port or other
authorities.
FCA case study 1
• For the FCA contract, the Buyer is suspicious about goods quality therefore asking for pre –
shipment inspection. The result shows that goods are not in accordance with the quality specified
in the contract. So who will bear the inspection cost?
3. FAS term (Free alongside ship)
3. FAS term (Free alongside ship)
- The Seller delivers when the goods are placed alongside the vessel at the named port of shipment
- The Buyer has to bear all costs and risks of loss of or damage to the goods from that moment
- This term can be used only for sea or inland waterway transport.
SELLER’S OBLIGATIONS
• The Seller must provide the goods and the commercial invoice, or its equivalent electronic
message, in conformity with the contract of sale
• The Seller must obtain at his own risk and expense any export license or other official
authorization and carry out, where applicable
• Contracts of carriage and insurance: No obligation
• The Seller must place the goods alongside the vessel nominated by the buyer at the loading place
named by the buyer at the named port of shipment on the date or within the agreed period and in
the manner customary at the port.
• The Seller must provide the Buyer at the seller's expense with the usual proof of delivery of the
goods.
weighing, counting) which are necessary for the purpose of delivering the goods
FAS case study 1
• Who bear the costs related to security checks before exporting under FAS, Incoterms 2020?
• Goods are sold under FAS term at the loading port. According to the contract, on July 15, the
goods are in the nominated place but on July 15, the buyer did not pick up the goods and did not
notify the seller. On July 16, the cargo was burning because of thunderstruck. Who bears this risk?
4. FOB term (Free on board)
4. FOB term (Free on board)
- The Seller delivers when the goods are placed on the board of the ship at the named port of
shipment
- The Buyer has to bear all costs and risks of loss of or damage to the goods from that point.
- This term can be used only for sea or inland waterway transport
Bill of Lading of FOB contract
- Clean B/L (Điều 27 UCP 600, E 20, ISBP 745)

Is one bearing no clause or notation expressly declaring a defective condition of the goods or their
packaging.
The word “clean” need not appear on a B/L even if a credit has a requirement that transport
document to be “clean on board”
- Shipped on board, on board, laden on board B/L
- Freight to collect/freight prepaid

The modification of FOB
• FOB liner terms (FOB berth terms): The set of conditions under which a shipping company will
transport goods. The liner terms in the shipping business also includes the amount of the cost of
loading and unloading, the freight, and the discharge fee once the items have been unloaded.
• FOB under tackle: Risks and losses of goods are transferred from the seller to the buyer since the
crane hooks the cargo for placing the goods on board of loading port.
• FOB stowed/trimmed: After placing the goods on board, the seller has the obligation to load the
goods (in the container or in the package) or scrape goods on board (bulk cargoes such as
some ores, coal).
• FOB shipment to destination: In addition to obligations such as FOB in Incoterms, the seller has
the obligation to charter a ship to carry the goods to the port of destination, at the buyer's
discretion and at the expense of the buyer.
FOB case study 1
• Firm X of Vietnam signed a contract to sell 5000MTS zircon sand to firm Y in Australia. Goods
are delivered under FOB, Sai Gon port, payment is made by L/C at sight, bill of lading date is
February 9 certifying that the goods are in good condition. The cargo was transferred to the 1st
berth (berth 1A), berth 2 (berth 2A) and berth 4. When the ship arrived at Burnside on March 31,
cargo in berth 1A was damaged. An inspection company concluded that the water had entered the
berth from the hatch and the ship’s ballast. The sand was seriously wet. The ballast berth adjacent
to the 1A berth contains freshwater from the Mississippi River before arriving at Burnside. The
ballast adjacent to the 1A tunnel contains freshwater from the Mississippi River before arriving at
Burnside. The number of damaged cargo carried down the barge was 1012MTS.
1. Is the seller bear the risk in this case?

2. The buyer claims the ship owner on the error "ship is not seaworthy“. Is it right or wrong?
FOB case study 2
• Firm X in Canada signed a contract to sell 300 devices (100 A devices and 200 B devices) to firm
Y in Vietnam with the contract value of 2,000,000 USD under FOB conditions. The cargo is
delivered in two shipments. Partial shipment is not allowed. Delivery time is in July, 2010.
Payment is made by deferred payment L/C in 6 months since the delivery date.
• FOB, Saigon is indicated in this case is right? What is the responsibility of delivery of firm X?
Can FOB replace FCA in this case?
• Who buys insurance for the cargo? Please indentify the insurance fee knowing that F = 1200USD,
R = 0.65%, V = 110% CIF.
FOB case study 3
• Firm A in Hong Kong signed a contract with a firm B in Vietnam buying 5000MT Eucalyptus wood, moisture
content not exceeding 30% of the contract value at USD 100,000, payment is made by at sight L/C. FOB Sai
Gon port.
• In order to implement the above contract, the foreign party has taken the vessel to Tan Cang. However, the
goods inspector nominated by the buyer is indilligent. The inspection level is 30%, 39%, 40% of the total
amount however the inspection result is not clearly presented. Firm B invited Vinacontrol for goods
inspection. Vinacontrol concluded that “The quality of the goods is in accordance with the mutual agreements
by both party”. When the delivery was fully made and it took one day for the ship to complete procedures for
departure to Hong Kong port. The representative of the buyer denied issuing document certifying that goods
had been under quality check because they did not request goods inspection therefore asking Vinacontrol to
issue the quality certificate. Under the request of Firm B (seller), firm A (buyer) has issued a quality certificate
with reservation that “accept to pay 80% of the contract value, the remaining was paid as soon as the ship
arrived and if the cargo was fully inspected. Firm B agreed with firm A ‘s proposal for this matter and let the
ship depart.
• Firm B (seller) presented the payment document to the bank for foreign trade of Vietnam (VCB)
however being denied to 'be paid because “the certificate of quality is under reservation”. As such
VCB had to negotiate with the issuing bank. The issuing bank refused to pay and give this request
to the buyer. 3 months later, the buyer sent payment acceptance to the bank for 80% of the contract
value and indicated that this amount is final.
5. CFR term (Cost and freight) = C (FOB)+F (freight)
CF, C&F, CNF
5. CFR term (Cost and freight)
CF, C&F
- The Seller delivers when the goods pass the ship's rail in the port of shipment
- The Seller must pay the costs and freight necessary to bring the goods to the named port of
destination BUT the risk of loss of or damage to the goods, as well as any additional costs due to
events occurring after the time of delivery, are transferred from the Seller to the Buyer
- The CFR term requires the seller to clear the goods for export
- This term can be used only for sea and inland waterway transport.
Seller’s obligation
• The seller must provide the goods and the commercial invoice, or its equivalent electronic
message, in conformity with the contract of sale and any other evidence of conformity which may
be required by the contract.
authorization and carry out, where applicable, all customs formalities necessary for the export of
the goods.
• Contract of carriage
• The Seller must deliver the goods on board the vessel at the port of shipment on the date or within
the agreed period.
Ship hiring responsibility of the seller
- The seller’s obligation
- A seaworthy vessel
+ Durable, solid, watertight and be able to withstand the usual wind speed, suitable for cruising
+ Suitable barge
+ Full equipment and food reserves
+ Berth, cooling berth, or other goods storage area being inline with specific cargoes.
- Young or old ship? Ship age???

CFR case study 1
• Under CFR contract, Incoterms 2020, The ship was sunk while cruising due to old and
unseaworthy vessels. Who will bear for the risk of the cargo?
• Liner terms # charter party voyage

CFR case study 2
• Firm X in Vietnam signed a contract for buying 500MTS steel under CFR, Sai Gon port. The
contract stipulates that the goods are loaded on board which can depart from any ports in Europe for
a journey at the seller’s option and the payment was made by D/P. 1 month after the signing date of
the contract, firm X sent a proposal to firm Y as follows “the cargo must be carried on the regular
route to Sai Gon” and firm Y agreed.
• Firm Y sent this proposal to their third party and added further request: “The vessels travel on regular
route and destined Sai Gon”. Unfortunately, on the way from Antwerp to Rotterdam for unloading
12000MTS, the vessel was confiscated for an auction sale after all the cargo was discharged under
the order of Dunkerque court.
• Firm X decided to cancel the contract and asked firm Y for indemnification due to shipment failure.
According to firm Y, they were not responsible for this risk and blame for the carrier.
1. Has the seller transferred risk to the buyer in this case?
2. Is there agreement on any modifications of the delivery term?
3. Who must indemnify for the buyer?
6. CIF term (Cost, insurance and freight): FOB+I+F = CFR+I
CIF cost insurance and freight
• The Seller delivers when the goods pass the ship's rail in the port of shipment
• The Seller must pay the costs and freight necessary to bring the goods to the named port of destination BUT
the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the
time of delivery, are transferred from the Seller to the Buyer.
• The CIF term requires the Seller to clear the goods for export
- Clean B/L
- On board B/L
- Freight to collect or freight prepaid B/L?
- A pretigous insurance company
- 110% of the total contract value
- Payment currency of the contract
• The Seller must provide the goods and the commercial invoice, or its equivalent electronic message, in
conformity with the contract of sale and any other evidence of conformity which may be required by the
contract.
• The Seller must obtain at his own risk and expense any export license or other official authorization and carry
out, where, all customs formalities necessary for the export of the goods.
• The Seller must deliver the goods on board the vessel at the port of shipment on the date or within the agreed
period.
weighing, counting) which are necessary for the purpose of delivering the goods.
The Seller must provide at his own expense packaging (unless it is usual for the particular trade to
ship the goods of the contract description unpacked) which is required for the transport of the goods
arranged by him. Packaging is to be marked appropriately.
General average
• is a legal principle of maritime law according to which all parties in a sea venture proportionally
share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole
in an emergency (for instance, when the crew throws some cargo overboard to lighten the ship in a
storm.
Both to blame collision
A both-to-blame collision clause is part of the ocean marine insurance policy that states that if a
ship (vessel) collides with another ship due to the negligence of both, owners and shippers of both
vessels must share in the losses in proportion with the monetary values of their cargo and interests
before the collision. The owners of the cargo and company responsible for shipment are both
required to pay for losses.
Jettision
• The act of casting goods from a vessel or aircraft to lighten or stabilize it.
Exclusive risks for insurance clause C
• Loss or damage intentionally caused by bad behavior of the insured person.
• Leakage, common loss in weight, natural atrophy of insured objects.
• Inherent vice
• Loss or damage caused by unsuitable packaging.

• The ship owner, ship manager or charterer suffer from financial problems.
WAR RISK
The insurer must compensate for the loss or damage caused by the goods:
• War, civil war, revolution, insurrection or civil strife arising from such events or any hostile act;
• Arrest, restrain;
• Landmines, mines, bombs or other war weapons;
• General average and salvage costs.
Insurance space: When cargo is loaded onto a seagoing ship until it is unloaded at the port of
destination
Insurance time: Expires 15 days from midnight on the day the vessel arrives at the port of discharge
STRIKE insurance clause
• Strikers, workers who are forbidden to work or who are involved in labor disputes, violence or
insurrection.
• Terrorist action or for political purposes
• General average and salvage costs
* The insurer will only compensate for losses caused by the direct action of the strikers without
being responsible for damage caused by the strike.
Insurance document (Clause 28 UCP 600)
• An insurance document, such as an insurance policy, an insurance certificate or a declaration

under an open cover, must appear to be issued and signed by an insurance company, an
underwriter or their agents or their proxies.
• When the insurance document indicates that it has been issued in more than one original, all
originals must be presented.
• Cover notes will not be accepted.
• The date of the insurance document must be no later than the date of shipment, unless it
appears from the insurance document that the cover is effective from a date not later than the
date of shipment.
• When the CIF or CIP value cannot be determined from the documents, the amount of insurance
coverage must be calculated on the basis of the amount for which honor or negotiation is
requested or the gross value of the goods as shown on the invoice, whichever is greater.
• The insurance document must indicate that risks are covered at least between the place of
taking in charge or shipment and the place of discharge or final destination as stated in the
credit.
CIF case study 1
• An import contract under CIF conditions and payment by L/C. Although the vessel has arrived for
a long time, the consignee has not been able to receive the cargo. What should the importer do?
• One shipment subject to CIF term being in transit due to hurricane avoidance has to take a detour
for several days and the cargo was degraded. Can the buyer refuse to receive the cargo?
The modification of CIF
• CIF Liner Terms

• CIF Landed
• CIF Quay
• CIF and c (CIF commission)
• CIF and i (CIF interest)
• CIF c and I (CIF commission and interest)
• CIF e (CIF exchange)
• CIF and war (CIF and war risk)
• CIF and WA (CIF with particular average):
• CIF under tackle
• CIF afloat
Particular average
• Marine insurance provision under which damages or expenses incurred by a shipper (whose cargo
is exposed to a danger) are borne by that shipper only. Such damages or expenses occur by direct
harm to the ship and/or cargo, or in a course of action to prevent initial or additional harm to them.
Particular average, like general-average is independent of the insurance cover bought for the
cargo. Instead, it arises out of the contract between the cargo-owner and the ship-owner.
CIF case study 1
• Firm X in Vietnam signed a contract to sell rice to firm Y in Algeria on November 27 with a
volume of 10000MT tolerance of 5% under the CIF term, Oran port and Singapore charter. The
payment is made once a full set of document was presented at an Algerian bank and the buyer
agreed. On January 21, the cargo has been loaded on board with an amount of 10,024MT. 2
months later, the vessel has not arrived. In fact, It takes 3-4 weeks for a ship from Vietnam
arriving at Algeria. However, the ship was not able in transit through Suez channel because of the
dispute arising from the carrier and the ship owner. When arriving at Gibralta, the ship was
arrested upon request of the bank’s pledge as security of loan and the ship was sold at
1.400.000USD. The cargo on the ship was unloaded before the ship arriving at Gibraltar and the
amount of goods on board before the vessel reached could not be found.
1. Was risk transferred from the seller to the buyer?

2. Can the buyer refuse to fulfill the payment?
CIF case study 2
• Phuong Nam firm in Vietnam agreed to sell the goods to firm Kosi in Japan with the following
conditions : Good amount was 200MT, tolerance amount was 1%, CIF Kosi port. Partial
shipments were not allowed , the goods was synchronized. The payment was made by at sight L/C
at Tokyo bank. Delivery time was in October 2014. Any dispute was settled by VIAC, Vietnam.
• At sight/deferred payment L/C
• The contract stipulated CIF SaiGon. Is it right or wrong? Please explain why?
.
7 CPT term: carriage paid to
7. CPT term: carriage paid to
- The Seller delivers the goods to the carrier nominated by him, but the Seller must in addition pay
the cost of carriage necessary to bring the goods to the named destination. This means that the
Buyer bears all risks and any other costs occurring after the goods have been so delivered.
- If subsequent Carriers are used for the carriage to the agreed destination, the risk passes when the
goods have been delivered to the first Carrier.
- The CPT term requires the seller to clear the goods for export. This term may be used irrespective
of the mode of transport including multimodal transport.
- The seller must provide the goods and the commercial invoice, or its equivalent electronic
- The seller must obtain at his own risk and expense any export license or other official
the goods.
- The Seller must deliver the goods to the carrier contracted or, if there are subsequent carriers to the
first carrier, for transport to the agreed point at the named place on the date or within the agreed
period.
- The seller must pay the costs of those checking operations (such as checking quality, measuring,
weighing, counting) which are necessary for the purpose of delivering the goods.
The seller must provide at his own expense packaging (unless it is usual for the particular trade to
send the goods of the contract description unpacked) which is required for the transport of the
goods arranged by him. Packaging is to be marked appropriately.
8. CIP term (carriage and insurance paid to)
8. CIP term (carriage and insurance paid to)
- The Seller delivers the goods to the Carrier nominated by him but the Seller must in addition pay
the cost of carriage necessary to bring the goods to the named destination
- The Seller also has to procure insurance against the Buyer's risk of loss of or damage to the goods
during the carriage
- The Buyer wish to have the protection of greater cover, he would either need to agree as much
expressly with the Seller or to make his own extra insurance arrangements.
- The CIP term requires the Seller to clear the goods for export. This term may be used irrespective
of the mode of transport including multimodal transport.
the goods.
• The Seller must deliver the goods to the Carrier contracted or, if there are subsequent carriers to
the first carrier, for transport to the agreed point at the named place on the date or within the
agreed period.
CIP case study 1
• Under CIP, Incoterms 2020. Cargo insurance is identified from time to time?
• A firm importing goods in the container under CIP Incoterms 2020, but the seller did not promptly
send the shipping documents therefore the warehousing costs increased .
Question: Who bear the increasing warehousing cost resulted from the stale document?
CIP case study 2
• When using C terms, Incoterms 2020 in shipment contract, the seller does not inform the buyer in advance whether
the goods are laden on board using special loading equipment and the buyer does not have appropriate preparation
therefore is not able to receive the cargo which must be remained on board of the ship. Who bear this additional
cost?
• ETD: estimated time of departure
• ETA: estimated time of arrival
• An importer buy goods under term C. After the contract is concluded, the price of the goods decreases in the local
country and he will get loss if determining to receive the cargo.
Question: Can the buyer refuse to receive the cargo because of the invalid documents and cancel the agreement?
Why?
9. DPU term: Delivered at place unloaded
9. DPU (delivered at place unloaded):
- The seller need carrying out all the duties under the terms of delivery specified in the contract. This means delivery of
the goods along with a commercial invoice in conformity with the contract of sale and other related documents.
- The seller is responsible for unloading goods from arriving means of transport, and then delivering by placing them at
the disposal of the buyer at the point agreed in the contract.
- DPU-Delivered at Place Unloaded” means that the seller delivers the goods, and at the same time, the risk and costs
transfer to the buyer when the goods are unloaded from the arriving means of transport and handed over to the buyer.
The place of delivery takes place at the destination indicated in the contract or at an agreed point.
- DPU is the only Incoterms rule that requires the seller to unload goods at the place of delivery. For this reason,
the seller should ensure that buyer is able to organize unloading at the place specified in the contract.
- In the case of DPU Incoterms, there is no obligation to make a contract of insurance

Responsibilities
• Where applicable, the buyer must assist the seller at the seller´s request, risk and cost in obtaining any
documents and /or information related to all export/transit clearance
formalities, including security requirements and pre-shipment inspection, needed by the country of export
and any country of transit (other than the country of import).
• Where applicable, the buyer must carry out and pay for all formalities required by the country of import:
•Import licence;
•security clearance for import;
•pre-shipment inspection;
•any other official authorisation.

10. DAP term: delivered at place
10. Điều kiện DAP (delivered at place): Giao tại nơi đến
- The seller pay:

1. The seller pay all costs relating to the goods and their transport until delivery ;
2. The seller pay possible unloading costs;
3. The seller pay export clearance costs;
4. The seller pay costs of delivery of documents regarding transport.
5. The seller pay the cost where applicable, duties, taxes and any other costs related the export and
any transit clearance
What the buyer bears
1. The buyer take costs related to the conclusion of the contract of carriage;
2. The buyer take any costs related to the goods from the moment of their delivery, and possible
unloading costs;
3. The buyer take import clearance costs;
4. The buyer take possible costs incurred by the seller related to import formalities and any other
cost related to import clearance
11. DDP term: delivered duty paid
11. Điều kiện DDP (delivered duty paid): Giao tại đích thuế đã nộp
- Seller delivers the goods to the buyer, cleared for import, and not unloaded from any arriving means of
transport at the named place of destination.
- The Seller has to bear all the costs and risks involved in bringing the goods thereto including, where
applicable
- Whilst the EXW term represents the minimum obligation for the seller, DDP represents the maximum
obligation. This term should not be used if the seller is unable directly or indirectly to obtain the import
license.
- This term may be used irrespective of the mode of transport but when delivery is to take place in the
port of destination on board the vessel or on the quay (wharf), the DES or DEQ terms should be used.
• The Seller must obtain at his own risk and expense any export and import licence and other
official authorisation or other documents and carry out, where applicable, all customs formalities
necessary for the export of the goods, for their transit through any country and for their import.
• The Seller must place the goods at the disposal of the buyer, or at that of another person named by
the buyer, on any arriving means of transport not unloaded at the named place of destination on
the date or within the period agreed for delivery.
• The Seller must contract at his own expense for the carriage of the goods to the named place of
destination. If a specific point is not agreed or is not determined by practice, the Seller may select
the point at the named place of destination which best suits his purpose.
weighing, counting) which are necessary for the purpose of delivering the goods
11. DDP: delivered duty paid
- DAP + import customs procedure
- Seller’s responsibilities are maximized

Exercise for group D terms
• When the seller delivers goods to many buyers at the same time under DPU. Does the seller have
to supply shipping documents to many buyers?
• An importing contract as per DPU Song Than, Binh Duong. When customs procedure is
implemented at Tan Cang, Ho Chi Minh city, goods can not pass the security clearance. Who will
bear this risk?
• When being delivered under DAP Incoterms 2010, the cargo is not fast unloaded. Who bear this
risk?
Questions for EXW
• A contract under Group D terms, the inspection of goods before the delivery or the inspection
under the order of the authorities, the seller or the buyer to bear the cost of inspection?
• Under certain Incoterms conditions, both buyers and sellers are not obliged to purchase insurance,
so the insurance must be bought?
• Assuming a firm imports under DDP for re-exporting. Is this firm able to receive import tax refund
when re-exporting this goods ?
• Does a firm importing goods under DDP bear the VAT cost?
Questions
• Incoterms are mandatory or optional documents? Why?
• How many groups can Incoterms 2010 be divided ? What are they?
• Which trade rules are applied for the marine transport?
• For terms in group C, the points of risk and cost transfer between buyers and sellers are the same?
Explain in details?
• For terms of group C, are exporters obliged to discharge the goods? And if the exporter has paid
the discharge, how will it handle?
• What kind of the charter contract includes loading and unloading costs?
Questions
• When delivery by container, by which terms , should FAS, FOB, CFR and CIF rules be replaced?
How do such changes bring benefits to exporters, importers?
• Do you think why most Vietnamese exporters choose FOB for exports and CIF for imports?
Discussion exercise 1
• Firm A in Ho Chi Minh city sells goods to firm B in India. The destination point is Osaka city,
Japan. Please find an appropriate term from Incoterms 2010 version for cases below:
a. 8000MT of rice, the seller after completing export procedure, hires vehicle, buys insurance for
the cargo. The seller transfers risk to the buyer when the cargo is loaded on a mean of transport
in exporting country.
b. Both parties agree all condition in (a) however changing the point of risk that the seller loads the
cargo safely on the means of transport.
c. The seller after completing export procedure helps the buyer to hire a vessel for shipment to
Osaka city, Japan however the freight is born by the buyer. The buyer at his discretion arrange
insurance for the cargo.
d. 10MT ceramics. The seller after completing export procedure delivers goods to the carrier. The
buyer covers other responsibilities for good delivery to Osaka, Japan.
e. Both parties agree all conditions in (d) however the seller is requested to cover responsibilities
related to shipment and insurance. The seller transfers risk to the buyer when he deliver goods to
the carrier in the exporting country.
• Please choose an appropriate term from Incoterms 2010 version knowing that exporting firm is
located in HCM city, the importing firms locates in Taiwan, Pusan, Korea is the loading port.
Good amount is 9000MT.
a. The seller proposes to deliver goods safely to the Phillipines port, paying unloading fee and the
importer is responsible for the import procedure.
b. The seller ends this responsibility when loading goods safely on board.
c. The buyer agrees all conditions in (b) however requests the seller to hire a vessel and to pay
freight and insurance cost. The point of risk transfer is on board of loading port.
d. Both parties agrees all condition in (c) however the point of risk transfer is at the port of
destination, the buyer bears loading cost.
e. The seller after completing export procedure pays loading fee. The buyer bears other remaining
costs.
• Choose an appropriate term from Incoterms 2010 knowing that importing firm is located in Ho
Chi Minh, Vietnam, exporting firm locates in Kobe, Japan. Loading point is at Tokyo city, Japan.
a. 15MTS Polyester fiber, the seller will not take any responsibility after completing export
procedure and delivers goods to the carrier.
b. The buyer agrees all conditions in (a) however request the seller to hire a vessel, paying the
ocean freight as well as loading cost.
c. The seller safely delivers goods to the warehouse of the buyer and the buyer take import
customs procedure.
d. The cargo is fertilizer, the seller does not take any responsibility after completing export
procedure and places safely on terminal at loading port.
e. The seller after completing export procedure support the buyer to hire a vessel but the buyer
pays the freight cost.
• Choose an appropriate term from Incoterms 2010 knowing that the exporting country is located in
HCM city, the buyer locates in Seoul, Korea. 1000MTS rice
a. The seller signs a carriage contract, paying freight and insurance cost, the buyer pays unloading
cost. The seller transfers risk to the buyer when the goods are loaded on to a vehicle.
b. The buyer does not agree condition in (a) and requests the seller to end responsibility after
loading the cargo on board and fulfilling export custom procedure.
c. The seller after completing export procedure signs a carriage contract but the freight cost is born
by the buyer. The seller transfers risk to the buyer when the cargo is loaded on board at the
loading port.
d. Both parties agree that: the seller does not take any responsibility after completing export
custom procedure and loading the cargo on board.
e. Both parties agree that the seller safely delivers the goods at the port of destination. The buyer
bears unloading and import clearance cost.
Mid-term test
Time: 30’
Students are required to send their answers via vuhanhftu@gmail.com
1. Choose an appropriate term from Incoterms knowing that the importing firm is located in HCM
city, the exporting firm locates in Oklahoma, Japan.
a. 60 motorbikes. The seller ends responsibility after delivering goods to the carrier
b. 500MTS steel. The seller ends responsibility after completing export customs procedure and
load the cargo on board.
c. The buyer totally agrees all conditions in (c) however requests the seller to sign a carriage
contract, paying freight and insurance cost.
d. Goods are pharmaceutical products shipped by airway. The seller ends responsibility after
completing export custom procedure.
2. Please note the similarities and differences between FOB and CIF, Incoterms 2020?
The relationship between Incoterms, methods of payment and UCP700
Incoterms Contract UCP 700

EXW, FCA, FAS, FOB, CFR, Rights and Obligations
CIF, CPT, CIP, DPU, DAP, DDP Seller and Buyers

Incoterms 2020 CLCKT Term 2 2021

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Incoterms 2020 CLCKT Term 2 2021

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INTERNATIONAL COMMERCIAL TERMS

- First published in1936 by International Chamber of Commerce

- Up to now, Incoterms was updated 6 times.

• EXW (Ex Works) – Giao tại xưởng

• FAS (Free Alongside Ship) – Giao dọc mạn tàu

• FAS (Free Alongside Ship) – Giao dọc mạn tàu

• EXW (Ex Works) – Giao tại xưởng

• EXW (Ex Works) – Giao tại xưởng

• EXW (Ex Works) – Giao tại xưởng

• Section A6 / B6 (FCA): The seller or buyer may negotiate on board B/L

- Simplify terms in foreign trade.

- Replace deals related to the merchandise trade.

- Are not intended to govern the terms of service contracts.

- Does not regulate acts related to the transfer of ownership.

- Does not adjust the breach of contracts.

- Warehouse (inventory cost)

- The seller makes the goods available at his premises

- The buyer is responsible for all charges

• On-spot export and on-spot import

• Checking goods, goods inspection, goods screening

+ At the Seller’s premises: the Seller is responsible for loading

+ At any other place: the Seller is not responsible for unloading

• Inland container depot (ICD)

• Packaging is to be marked appropriately.

1. FCL (full container load)/CY (container yard):

• Issues a bill of lading and declare manifest for the shipper.

• Unloading a container and put it onto a port of destination.

• Present a full set of shipping documents.

A bill of lading (sometimes abbreviated as B/L or BoL) is a document issued by a carrier

A bill of lading must be transferable and serves three main functions:

- it contains or evidences the terms of the contract of carriage; and

- it serves as a document of title to the goods

House bill issued by

Original bill printed by Surrender bill printed by

- Providing detailed information for a consolidator to issues B/L.

- Certifying draft bill for an official B/L

• Fully responsible for goods shipment

• Provide house bill for his customer

• Goods notification and manifest notification

- Indicate the name of the carrier and the signature by:

- Indicates that goods are received for shipment

Incoterm 2020: The seller can acquire an on board B/L

STT Loại phí Đơn vị Loại tiền 20’GP 40’DC 40’HC

3 CIC fee-phí chuyển rỗng cont VND 1,150,000 2,300,000 2,450,000

4 Cleaning fee-phí vệ sinh cont cont VND 120,000 240,000 240,000

5 Handling fee-phí làm hàng shipment VND 600,000 600,000 600,000

STT Tên loại phí Đơn vị Loại tiền Đơn giá

3 Destination THC – phí xếp dỡ cảng đến CBM VND 184,000

4 CIC fee – phí cân bằng container CBM VND 115,000

5 Handling fee – phí làm hàng Shipment VND 690,000

- Clean B/L (Điều 27 UCP 600, E 20, ISBP 745)

- Shipped on board, on board, laden on board B/L

- Freight to collect/freight prepaid

1. Is the seller bear the risk in this case?

- The seller’s obligation

+ Full equipment and food reserves

- Young or old ship? Ship age???

• Liner terms # charter party voyage

• Loss or damage intentionally caused by bad behavior of the insured person.

• Leakage, common loss in weight, natural atrophy of insured objects.

• Loss or damage caused by unsuitable packaging.

• Terrorist action or for political purposes

• General average and salvage costs

• An insurance document, such as an insurance policy, an insurance certificate or a declaration