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Faq

Incoterms rules

These are 11 international rules applied in international trade, which determine the rights and obligations of the parties to the contract of sale, in terms of delivery of goods from the seller to the buyer (terms of delivery of goods).

Please remember that the Incoterms rules do not replace the sales contract, but only allow you to shorten it. The terms of delivery of Incoterms do not determine the transfer of ownership of the goods, do not indicate the price for the goods and the method of payment or the consequences of a breach of the contract. Incoterms only reflect the distribution between the seller and the buyer of duties and financial costs, such as transportation of goods, loading and unloading from a vehicle, customs clearance, payment of taxes, duties and fees, insurance, as well as the transfer of risks of loss and damage to goods.

EXW - Ex Works named place.

Ex works INCOTERMS

The terms of delivery of EXW Incoterms 2020 impose minimum obligations on the seller, and the buyer must bear all the costs and risks of loading the goods into the vehicle, performing export customs procedures and transporting it from the seller’s enterprise to the destination. The EXW term can be used for the transportation of goods by any mode of transport, including multimodal transport. Under the EXW clause, the seller is not responsible for loading the goods onto the vehicle provided by the buyer, nor for customs clearance of the exported goods, nor for paying customs duties, unless otherwise specified. Based on EXW delivery, the buyer bears all risks of loss or damage to the goods from the moment they are presented by the seller on their territory until the end of the carriage to the specified destination.

FCA - Free carrier named place

The term “Free Carrier” means the delivery by the seller of the goods at a specified place to the carrier indicated by the buyer. The terms of delivery of FCA Incoterms 2020 impose the obligations to load the goods onto the transport at the agreed place of departure and to carry out export customs procedures for exporting goods with payment of export duties and other fees  on the seller.
However, the seller is not obliged to fulfil customs formalities for the import of goods, pay import customs duties or carry out other import customs procedures upon import. If the parties intend to impose on the seller the costs of delivering the goods to the buyer, it is advisable to use the CPT Incoterms 2020 rule.

The difference between FCA and EXW delivery terms is the obligation to load the goods into the vehicle and to carry out export customs clearance.

In simple words, according to the FCA delivery basis: the goods, which have passed the export customs clearance at the expense of the seller, are loaded by the seller into the buyer’s vehicle if the shipment takes place at the seller’s premises.

FAS - Free alongside ship named port of shipment

FCA means that the seller is deemed to have fulfilled his delivery obligations when the goods are placed alongside a vessel hired by the buyer at the quay or lichter at the named port of shipment.
The FAS delivery rule can only be applied for the carriage of goods by sea or inland waterway. The terms of delivery of FAS Incoterms 2020 impose on the seller the obligations to place the goods next to the vessel provided by the buyer and to carry out export customs procedures with payment of export duties and other fees in the country of departure for the export of goods. However, the seller is not obliged to comply with customs formalities for the import of goods, pay import customs duties or perform other import customs procedures upon import. The buyer is obliged to load the goods on a chartered vessel, pay for the freight of the vessel, unload at the port of arrival, complete import customs clearance with payment of import customs duties and taxes, and deliver the goods to their destination.

The critical moment in the delivery of FAS is that when placing the goods at the quay – the ship must be present in the port and be close by. Placing the goods on the berth, but in the absence of a vessel in the port, will not be a completed shipment for the seller in accordance with the FAS delivery terms.

FOB - Free on board named port of shipment

The terms of delivery of FOB Incoterms 2020 impose on the seller the obligations to place the goods on board the vessel provided by the buyer and to carry out export customs procedures with payment of export duties and other fees in the country of departure for the export of goods. However, the seller is not obliged to comply with customs formalities for the import of goods, pay import customs duties, or perform other import customs procedures upon import.
The buyer is obliged to charter the ship, pay the freight of the ship, unload at the port of arrival, complete the import customs clearance with payment of import customs duties and taxes, and deliver the goods to their destination. If the parties intend to impose on the buyer the obligations to load the goods on board the vessel, it is advisable to use the FAS Incoterms 2020 rule.
The FOB delivery basis is relevant when transporting heavy equipment, for goods transported in bulk or containers. When placing the goods in a container, it is typical for the seller to hand over the goods to the sea carrier at the terminal (or at the seller’s premises after the goods have been loaded into the container), rather than by placing them on board the ship, in such cases the term FCA Incoterms 2020 should be used.
The risk of loss or damage to the goods is passed from the seller to the buyer when the goods are completely on board the ship, from that moment the buyer bears all risks and costs. The main responsibility of the seller is to transport the cargo to the named port of shipment and load it onto a ship chartered by the buyer.

CFR - Cost and Freight named port of destination

The terms of delivery of CFR Incoterms 2020 impose on the seller the obligations to place the goods on board the vessel and pay the costs and freight necessary to deliver the goods to the specified port of destination, as well as to carry out export customs procedures with payment of export duties and other fees in the country of departure for the export of goods. …
However, the seller is not obliged to comply with customs formalities for the import of goods, pay import customs duties, or perform other import customs procedures upon import.
The buyer is obliged to unload the vessel hired by the seller at the port of arrival, carry out import customs clearance with payment of import customs duties and taxes, and deliver the goods to their destination. If the parties intend to impose on the buyer the obligation to deliver the goods by ship to the port of destination, it is advisable to use the FOB Incoterms 2020 rule.
The CFR delivery basis is relevant when transporting heavy equipment, for goods transported in bulk or in containers. When placing the goods in a container, it is typical for the seller to hand over the goods to the sea carrier at the terminal (or at the seller’s premises after loading the goods into the container), and not by placing them on board the ship, in such cases the term CPT Incoterms 2020 should be used.
According to the CFR delivery basis, the buyer assumes all risks of loss or damage to the goods, as well as other costs after the goods, have been placed on board the ship at the port of shipment, and not when the goods have reached their destination. The CFR trade term contains two critical clauses, as risk and cost pass in two different places: the risk on board the ship after a full load of goods, and the cost at the port of discharge.