Ok so maybe it’s not the most exciting topic, but how you utilize the Incoterms in your supply chain can have a huge bearing on your company’s competitive advantage. SwizStick and I will be posting several articles over the next few weeks regarding each Incoterm. We will detail some of the benefits of each as well as clear up some common misconceptions and mis-usages of the incoterms.

The Incoterms were published by the International Chamber of Commerce in 1936 and are the standard international trade definitions most commonly used in international sales contracts. There are a total of 13 Incoterms beginning with the E Terms which represent the least amount of risk to the seller and ending with the D Terms which represent the greatest amount of risk to the seller. The Incoterms essentially describe who is responsible for paying for the freight charges and at what time the risk of loss or damage to the goods transfers from the seller to the buyer. No one Incoterm is better than another and it is up to the discretion of a company as to which Incoterm is most relevant and beneficial to it’s supply chain.

Below are the 13 Incoterms. We will cover each one over the next few weeks.

EXW - EX WORKS (named place)

FCA - FREE CARRIER (named place)

FAS - FREE ALONGSIDE SHIP (named port of shipment)

FOB - FREE ON BOARD (named port of shipment)

CFR - COST AND FREIGHT (named port of destination)

CIF - COST, INSURANCE AND FREIGHT (named port of destination)

CPT - CARRIAGE PAID TO (named place of destination)

CIP - CARRIAGE AND INSURANCE PAID TO (named place of destination)

DAF - DELIVERED AT FRONTIER (named place)

DES - DELIVERED EX SHIP (named port of destination)

DEQ - DELIVERED EX QUAY (named port of destination)

DDU - DELIVERED DUTY UNPAID (named place of destination)

DDP - DELIVERED DUTY PAID (named place of destination)

This interpretation is provided as a guide only.

Incoterms are published by the International Chamber of Commerce and are available on their website and official publication “Incoterms 2000″. For a complete and official overview please refer to the ICC’s publication.

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