DEQ

DEQ – Delivered Ex Quay – Well here it is the most popular Incoterm of all…..errr actually I have never seen this Incoterm used in my business dealings, but that is not to say that this particular Incoterm is of no value. The DEQ Incoterm is only used for ocean or inland waterway shipments. Under DEQ, the seller or exporter is responsible for clearing the goods for export and for making them available to the buyer on the quay (wharf) at the named port of destination. In order for this particular Incoterm to be used correctly a named port of destination must be stated. After the goods have been made available at the destination wharf, the buyer is then responsible for the import clearance, duties, inland delivery and all other destination fees incurred up to the final destination.

Under DEQ terms, the seller’s risks end the moment the goods have been made available at the destination port:
Seller’s Responsibilities:
1) Produces the goods and commercial documents as required by the sales contract.
2) Arranges for export clearance and all export formalities.
3) Arranges and pays for all costs for the transportation of the goods up to the agreed point in the named port or wharf of destination.
4) Assumes all risk to the goods (loss or damage) until the product has been made available to the buyer at the named port and quay (wharf).
5) Seller must advise the buyer that the goods have been delivered to the carrier.
6) Seller has to provide the buyer with transport documents that will allow the buyer to take possession of the goods at the agreed point in the named port of destination.

Buyer’s Responsibilities:
1) Buyer must pay for the goods as per the sales contract
2) Buyer must obtain all commercial documentation, licenses, and authorizations required for import and arrange for import clearance and formalities at own risk and cost.
3) Buyer takes delivery of the goods after they have been delivered by the seller to the named quay.
4) Buyer must assume all risks for the goods from the time the goods have been made available at the quay.
5) Buyer pays for all costs of transportation, import customs formalities and duty fees, and all other formalities and charges related to the transportation of the shipment from the time the goods have been delivered to the agreed quay at destination.
6) Buyer would accept the seller’s transport documents provided they conform with the sales contract and will allow the buyer to take possession of the goods after delivery to agreed quay at 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.

CIP

CIP – “ Carriage and Insurance Paid to “ is an incoterm that is commonly confused with CIF. Unlike it’s more common sibling CIF, I rarely see CIP used, with too many companies using CIF for air shipments and other modes of transport when what they really should be using is CIP. CIP, unlike CIF, can be used for any kind of shipment. CIP is very similar to CIF in that it includes insurance as well as cost and freight.
In CIP, the seller/exporter arranges for the goods to be delivered to the named port of destination. Similar to CPT, the seller’s risks do not end until the moment the goods have been delivered to the carrier, but typically do not end until the carrier reaches the agreed destination. Because this incoterm can be used for any mode of transport, a carrier in this case could be a steamship line, a trucker, a railroad, or a freight forwarder. The seller is responsible for all costs until the goods have been delivered to the named port of destination. In this case, the named port of destination is domestic to the buyer, meaning that the named port must be a port in the buyer’s country, however unlike other similar incoterms the named port of destination is not necessarily the final delivery point: it could be, but it could also be an agreed upon point at the port of destination. So if you were selling cherries to Thailand (ed. “ again with the cherries example?) you would use the term “CIP, Carriage and Insurance Paid to Laem Chabang Port, Thailand” however Laem Chabang might or might not be the final delivery point at the port of destination.

Under CIP terms, the seller’s risks end the moment the goods are delivered to the carrier, but typically do not end until the carrier reaches the agreed destination. The seller is responsible for all costs up to the named port of destination :
Seller’s Responsibilities:
1) Produces the goods and commercial documents as required by the sales contract.
2) Arranges for export clearance and all export formalities.
3) Arranges and pays for all costs for the transportation “ including insurance ” – of the goods up to the agreed point in the named port of destination.
4) Assumes all risk to the goods (loss or damage) only up to the point they have been handed over to the carrier, typically, but not always, ending when the carrier reaches the agreed destination.
5) Seller must advise the buyer that the goods have been delivered to the carrier.
6) Seller has to provide the buyer with transport documents that will allow the buyer to take possession of the goods at the agreed point in the named port of destination.

Buyer’s Responsibilities:
1) Buyer must pay for the goods as per the sales contract
2) Buyer must obtain all commercial documentation, licenses, and authorizations required for import and arrange for import clearance and formalities at own risk and cost.
3) Buyer takes delivery of the goods after they have been delivered by the seller to the agreed point in the named port of destination.
4) Buyer must assume all risks for the goods from the time the goods have been handed over to the carrier, typically, but not always, ending when the carrier reaches the agreed destination. SPECIAL NOTE: While the seller is obligated to insure the goods, the buyer may have a vested interest in the goods during the voyage. It may be a wise decision for the buyer to purchase additional insurance coverage in the case of a loss.
5) Buyer pays for all costs of transportation, import customs formalities and duty fees, and all other formalities and charges related to the transportation of the shipment from the time the goods have been delivered to the agreed point in the named port of destination.
6) Buyer would accept the seller’s transport documents provided they conform with the sales contract and will allow the buyer to take possession of the goods after delivery to agreed point in the named port 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.

CPT

CPT “ Carriage Paid To “ is an incoterm that can be used for any kind of shipment. CPT is somewhat similar to CFR and CIF with some differences.
In CPT, like CIF, the seller/exporter arranges for the goods to be delivered to the named port of destination. Unlike both CFR and CIF, the seller’s risks end the moment the goods have been delivered to the carrier. Because this incoterm can be used for any mode of transport, a carrier in this case could be a steamship line, a trucker, a railroad, or a freight forwarder. The seller is responsible for all costs until the goods have been delivered to the named port of destination. In this case, the named port of destination is domestic to the buyer, meaning that the named port must be a port in the buyer’s country, however unlike other similar incoterms the named port of destination is not necessarily the final delivery point: it could be, but it could also be an agreed upon point at the port of destination. So if you were selling cherries to Thailand (can you tell I like this example?) you would use the term “CPT, Carriage Paid to Laem Chabang Port, Thailand” however Laem Chabang might or might not be the final delivery point at the port of destination.

Under CPT terms, the seller’s risks end the moment the goods are handed over to the carrier but the seller is responsible for all costs up to the named port of destination :
Seller’s Responsibilities:
1) Produces the goods and commercial documents as required by the sales contract.
2) Arranges for export clearance and all export formalities.
3) Arranges and pays for all costs for the transportation of the goods up to the agreed point in the named port of destination.
4) Assumes all risk to the goods (loss or damage) only up to the point they have been turned over to the carrier. Seller is under no obligation to buy insurance. SPECIAL NOTE: While the seller has no obligation to insure the goods and may not be legally responsible for the goods once they are with the carrier, he may have a vested interest in the goods during the voyage. It may be a wise decision to purchase additional insurance coverage in the case of a loss.
5) Seller must advise the buyer that the goods have been delivered to the carrier.
6) Seller has to provide the buyer with transport documents that will allow the buyer to take possession of the goods at the agreed point in the named port of destination.

Buyer’s Responsibilities:
1) Buyer must pay for the goods as per the sales contract
2) Buyer must obtain all commercial documentation, licenses, and authorizations required for import and arrange for import clearance and formalities at own risk and cost.
3) Buyer takes delivery of the goods after they have been delivered by the seller to the agreed point in the named port of destination.
4) Buyer must assume all risks for the goods from the time the goods have been handed over to the carrier. SPECIAL NOTE: While neither the seller or the buyer are required to insure the shipment, the buyer may have a vested interest in the goods during the voyage. It may be a wise decision for the buyer to purchase additional insurance coverage in the case of a loss.
5) Buyer pays for all costs of transportation, import customs formalities and duty fees, and all other formalities and charges related to the transportation of the shipment from the time the goods have been delivered to the agreed point in the named port of destination.
6) Buyer would accept the seller’s transport documents provided they conform with the sales contract and will allow the buyer to take possession of the goods after delivery to agreed point in the named port 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.

CIF

CIF – Cost, Insurance and Freight – is a very commonly used incoterm. This is another incoterm that officially is not supposed to be used for air shipments, but I have seen its usage in both air and ocean shipments. Officially CIF is only to be used for ocean or inland waterway transport. CIF is basically the same as CFR except that it includes insurance as well as cost and freight.

In CIF, the seller/exporter arranges for the goods to be delivered to the named port of destination. However, unlike CFR, the seller’s risks do not end until the moment the goods have passed the ship’s rail at the named port of destination. The seller is responsible for all costs until the goods have been unloaded at the named port of destination. In this case, the named port of destination is domestic to the buyer, meaning that the named port must be a port in the buyer’s country. For example, if I was exporting cherries to Thailand and the port of destination was Laem Chabang, I would sell it based on “CIF Cost, Insurance and Freight Laem Chabang, Thailand”.

Under CIF terms, the seller’s risks end the moment the goods pass the ship’s rail at the named port of destination, but the seller is responsible for all costs up to the named port of destination :
Seller’s Responsibilities:
1) Produces the goods and commercial documents as required by the sales contract.
2) Arranges for export clearance and all export formalities.
3) Arranges and pays for all costs for the transportation of the goods up to the named port of destination.
4) Assumes all risk to the goods (loss or damage) only up to the point they have been carried to the port of destination and ends the moment the goods pass the ship’s rail at port of destination.
5) Seller must advise the buyer of the location and time that goods have been delivered onto the named vessel.
6) Seller has to provide the buyer with transport documents that will allow the buyer to take possession of the goods at the named port of destination.
Buyer’s Responsibilities:
1) Buyer must pay for the goods as per the sale contract
2) Buyer must obtain all commercial documentation, licenses, and authorizations required for import and arrange for import clearance and formalities at own risk and cost.
3) Buyer takes delivery of the goods after they have been delivered by the seller to the named port of destination.
4) Buyer must assume all risks for the goods from the time the goods pass the ship’s rail at port of destination to delivery into the buyer’s warehouse or other specified location. SPECIAL NOTE: While the seller is obligated to insure the goods and is legally responsible for the goods up to the port of destination, the buyer may have a vested interest in the goods during the voyage. It may be a wise decision for the buyer to purchase additional insurance coverage in the case of a loss.
5) Buyer pays for all costs of transportation, import customs formalities and duty fees, and all other formalities and charges related to the transportation of the shipment from the time the goods have been delivered to the named port of destination.
6) Buyer would accept the seller’s transport documents provided they conform with the sales contract and will allow the buyer to take possession of the goods after arrival at the named port 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.

CFR

CFR “Cost and Freight” is a less recognizable, but actually commonly used incoterm, it is basically a variation of its more recognizable big brother CIF. This is another incoterm that officially is not supposed to be used for air shipments, but I have seen its usage in both air and ocean shipments. Officially CFR is only to be used for ocean or inland waterway transport.

SPECIAL NOTE: You may see a number of variations of CFR used in documentation. For example, the term CFR was previously denoted as “C&F” and is still commonly used in this way. Also, the proper way to denote this incoterm is the usage of “CIF – Cost and Freight (named port of destination)” which leads many to confuse CFR with CIF, which is another incoterm very similar to CFR except that insurance is included. Still others will denote cost and freight as “CFR – Cost and Freight (named port of destination)”. “C&F” is still very commonly used, but don’t be surprised to see variations of “CIF……” or “CFR…..” used as well.

In CFR, the seller/exporter arranges for the goods to be delivered to the named port of destination. The seller’s risks end the moment the goods have been delivered onto the vessel at the port of departure, yet the seller is responsible for all costs until the goods have been unloaded at the named port of destination. In this case, the named port of destination is domestic to the buyer, meaning that the named port must be a port in the buyer’s country. For example, if I was exporting cherries to Thailand and the port of destination was Laem Chabang, I would sell it based on “CIF Cost and Freight Laem Chabang, Thailand”.

Under CFR terms, the seller’s risks end the moment the goods are delivered onto the vessel at the named port at origin, but the seller is responsible for all costs up to the named port of destination :
Seller’s Responsibilities:
1) Produces the goods and commercial documents as required by the sales contract.
2) Arranges for export clearance and all export formalities.
3) Arranges and pays for all costs for the transportation of the goods up to the named port of destination.
4) Assumes all risk to the goods (loss or damage) only up to the point they have been delivered onto the vessel at the port of departure, place, and time stipulated in the sales contract. SPECIAL NOTE: While the seller has NO obligation under CFR to insure the goods and may not be legally responsible for the goods once they are placed on the vessel at the port of departure, he may have a vested interest in the goods during the voyage. It may be a wise decision to purchase additional insurance coverage in the case of a loss.
5) Seller must advise the buyer of the location and time that goods have been delivered onto the named vessel.
6) Seller has to provide the buyer with transport documents that will allow the buyer to take possession of the goods at the named port of destination.
Buyer’s Responsibilities:
1) Buyer must pay for the goods as per the sale contract
2) Buyer must obtain all commercial documentation, licenses, and authorizations required for import and arrange for import clearance and formalities at own risk and cost.
3) Buyer takes delivery of the goods after they have been delivered by the seller to the named port of destination.
4) Buyer must assume all risks for the goods from the time the goods have been delivered onto the vessel to delivery into the buyer’s warehouse or other specified location.
5) Buyer pays for all costs of transportation, import customs formalities and duty fees, and all other formalities and charges related to the transportation of the shipment from the time the goods have been delivered to the named port of destination. Buyer should take note that the seller is under no obligation to insure the goods during transit and is responsible for all costs relating to loss or damage of goods or non-delivery from the time the goods have been delivered onto the vessel. It would be wise for the buyer to purchase cargo insurance that covers the goods from the time they are loaded onto the vessel at the port of departure until they arrive into the buyer’s possession.
6) Buyer would accept the seller’s transport documents provided they conform with the sales contract and will allow the buyer to take possession of the goods after arrival at the named port 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.

FOB – Free On Board – is a very commonly used Incoterm, particularly in China/Hong Kong and other parts of Asia. While it is supposed to be used only for ocean or inland waterway transport I have seen instances of shippers using it for air shipments as well. There are a number of Incoterms that are wrongly used for air shipments despite their definition and this is one of them.

In FOB – Free On Board – the seller/exporter arranges for the goods to be delivered onto the vessel at the named port of departure. The named place of origin in the sales contract will always be “domestic” to the seller. For example, if I was selling containers of hard drives from Yantian, China, I might sell it to an importer in Los Angeles on an “FOB-Free On Board ABC Vessel, Yantian, China” basis.

Under FOB terms, the seller’s risk and responsibility end the moment the goods are delivered onto the vessel at the named port of origin :
Seller’s Responsibilities:
1) Produces the goods and commercial documents as required by the sales contract.
2) Arranges for export clearance – IF stipulated in the sales contract.
3) Makes the goods available to the buyer after being loaded on the vessel at the named port of shipment.
4) Assumes all risk to the goods (loss or damage) only up to the point they have been delivered onto the vessel at the named port, place, and time stipulated in the sales contract.
5) Seller must advise the buyer of the location and time that goods have been delivered onto the named vessel.
6) Seller has to provide the buyer with proof of delivery to the carrier or transport documents.
Buyer’s Responsibilities:
1) Buyer must pay for the goods as per the sale contract
2) Buyer must obtain all commercial documentation, licenses, authorizations, and import formalities at own risk and cost.
3) Buyer must take delivery of the goods after they have been delivered by the seller onto the vessel at the named port of origin.
4) Buyer must assume all risk and responsibility for the goods from the time the goods have been delivered onto the vessel to delivery into the buyer’s warehouse or other specified location.
5) Buyer pays for all costs of transportation, insurance, export and import customs and duty fees, and all other formalities and charges related to the transportation of the shipment from the time the goods have been delivered onto the vessel. This includes all costs relating to loss or damage of goods or non-delivery from the time the goods have been delivered onto the vessel.
6) Buyer would accept the seller’s proof of delivery to the carrier or transport documents.

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.

All joking aside, it is something we have been lazy about, we plead guilty. This weekend, provided we have enough free time while watching our kids, we will get cracking and post more Incoterms. Hopefully we can get them all posted shortly for your easy reference.

Please be patient and expect the next Incoterm to be posted tomorrow!