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INCOTERMS ® 2020 INCOTERMS = ALL ABOUT THE COSTS, TASKS, RISKS
NECESSITY OF INTERNATIONAL RULES
Seller must deliver Buyer must pay are free to make arrangements regarding their rights and obligations
if they haven’t made arrangements, the legal rules apply (can vary from country to country)
Risk = who is responsible in case of damage or loss
Ownership = whom the goods belong, important when one of the parties goes broke (failliet)
IncoTerms = international rules for the interpretation of trade terms
IMPORT = receiving goods or services from another country and use in the market and make profit after paying
for the said goods and services.
EXPORT = delivering services or goods abroad and getting paid and making profit.
Tendancies: complexity and globalism lead to misunderstandings which can lead to disputes, claims and losses.
Tendancies: complexiteit en globalisme leiden tot misverstanden die leiden tot geschillen, claims en verliezen.
=> Prevention of claims Voorkoming van claims
Tadzjikistan: you can’t jump into your car to discuss about things, you have to improve things You can easily sell/buy goods in China, …
But how sure are you that the goods come in China, how sure are you that China respect the rules, …
COMMERCIAL / OPERATIONAL RELEVANCE
Commercial relevance of Incoterms: Cost calculation of contract price Costs of transport, documents
Operational relevance of Incoterms: Who does what, when, where? At who’s expense and risk?
= 1000€ but you sell it CPT (Carriage Paid To (vracht betaald tot)), DDP (Delivered Duty Paid (geleverde rechten
betaald)) the final price will depend on the IncoTerms = you must be aware of the commercial relevance
Knowledge of the IncoTerms are important but also the operational side
COSTS DURING DELIVERY (SOMEONE HAS TO PAY FOR IT …)
Weighing, measuring, packaging
Warehousing (own warehousing or from someone else ; high cost)
Fumigation costs (desinfection by fumes dampen) Insurance Transport (surcharges)
Documents (you can’t sell goods international without documents, someone has to make/pay them/bear risks)
Clearing the goods Survey (inspection) Loading (un)loading on vehicle
Demurrage (when a container stays to long on the terminal) …
Legal = risks related on your contract Political/Economical = example: currency risks = valuta
If there is a risk like this, you can take an IncoTerms
INCOTERMS ® 2020
USE INCOTERMS® 2020 = TO ESTABLISH A CLEAR DIVISION - OF COSTS AND RISKS AND TASKS - BETWEEN THE BUYER AND
THE SELLER - CONCERNING THE DELIVERY OF THE GOODS.
WHICH INCOTERM SHALL WE USE?
Mode of transport: how, possible?
Control over documents, transport?
Risks of transport, liability (AS)?
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Position during negociation (Positie tijdens onderhandeling)?
Can we arrange customs formalities (douane formaliteiten)?
Are there any political risks, social risks?
Profitable rates for carriage and insurance (Voordelige tarieven voor vervoer en verzekering)?
What are my options? How far can I go, how far will I go?
HOW TO REFER TO INCOTERMS ® IN CONTRACT OF SALES (COS)?
CFR Shanghai, Incoterms ® 2020
1. Delivery term Leveringstermijn (IncoTerms) Example: CFR
2. Specify place of delivery/destination Specificeer plaats levering/bestemming Example: Shanghai
3. Refer to version of Incoterms ® Raadpleeg de versie van Incoterms ®
Use the trademark Incoterms®
Use Incoterms® with capital as initial letter
Do not use Incoterm without the final ‘s’, even individual term should be referred to as Incoterms®
INTENTION OF INCOTERMS = TO GIVE AN ANSWER PRIMARILY BY REGULATING:
Division (= verdeling) of costs between seller and buyer
Division of the risk between seller and buyer
Division of tasks between seller and buyer (packing, documents, inspection documents, …)
“the critical point” = point in transit where the seller’s responsibility end and buyer’s responsibility begins
4 GROUPS OF INCOTERMS ®
E-group: minimum obligation for the seller minimale verkopersverplichting
o EXW: delivery is at the seller’s works where the buyer must collect the goods
F-group: main carriage unpaid, delivery is not far from his home base hoofdrijtuig onbetaald, levering is
niet ver van zijn thuisbasis
o Buyer has to buy and take care of the main carriage
o F = free = free of cost for the seller - seller doesn’t have to pay (bv. “free” on board)
C-group: main carriage paid, delivery near his home base at point of delivery hoofdvervoer betaald,
levering in de buurt van zijn thuisbasis op punt van levering
o Seller pays the main carriage
D-group: delivered in port or at the place of destination geleverd in haven of op plaats van bestemming
o Seller deliver to and have responsibilities far from his home base
INCOTERMS ® 2020 BY MODE OF TRANSPORT
REVISIONS ON REGULAR BASIS HERZIENINGEN OP REGELMATIGE BASIS (+/- 10 YEARS)
New transportation techniques: Containerization + Ro/Ro traffic
EDI and digitalisation
Clarity, uniformity and harmonisation (B/L, packaging, insurance, customs docs, …)
2020 = the latest version of the IncoTerms because they change (10 years)
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MULTIMODAL TERMS – FOR ANY KIND OF TRANSPORT
Group What Examples Explanation
E departure EXW: Ex Works Min. obligation seller
F main carriage unpaid by seller FCA: Free Carrier
C main carriage paid by seller CPT: Carriage Paid To
CIP: Carriage and Insurance Paid to
D paid till arrival DAP: Delivered at Place
DPU: Delivered at Place unloaded
DDP: Delivered Duty Paid Max. obligation seller
Multimodal Incoterms - can be used for all the types of transport
UNIMODAL TERMS – SEA TRANSPORT AND INLAND WATERWAYS
Group Examples
F FAS: Free Alongside Ship
FOB: Free On Board IncoTerms = agreements between a seller and a buyer
Unimodal Incoterms – only for sea transport and inland
C CFR: Cost and Freight
waterways
CIF: Cost, Insurance and Freight
APPLICATION OF THE INCOTERMS ®
ATTENTION 1
Only applicable if referred to in the contract ! Don’t forget to reffer in your contract!
Other stipulations in contract overrule Incoterms ® andere bepalingen hebben voorrang op Incoterms
o Because IncoTerms are ONLY agreements afspraken!
o You can change agreements, but you can’t change the law
Do not apply to contract of carriage niet van toepassing op vervoercontracten
Seller must provide for the export packing
Buyer should inform him of the circumstances relating to the transport before the contract is concluded
if he buys EXW IncoTerms, the buyer may expect export packaging material to be included in the price, but
the seller’s conditions may indicate that this should be negotiated and paid for separately. 2
MOST WIDELY USED TERMS
= CIF and FOB = sea transport = seller provides for zorgt voor export customs clearance inklaring and the
buyer for import customs clearance Clearing = taking all necessary steps so that X or M can be carried out legally
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"Incoterms do not have the force of law. It is not mandatory to refer to them. The fact that this almost always does occur
has to do with the uniform way in which they are interpreted by all parties concerned, such as banks, insurers and carriers.
They all have the ICC booklet in their drawer.“
"Incoterms hebben niet de kracht van wet. Het is niet verplicht om ernaar te verwijzen. Dat dit bijna altijd voorkomt heeft
te maken met de uniforme manier waarop ze worden geïnterpreteerd door alle betrokken partijen, zoals banken,
verzekeraars en vervoerders. Ze hebben allemaal het ICC-boekje in hun la.”
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Als hij EXW IncoTerms koopt, mag de koper verwachten dat exportverpakkingsmateriaal bij de prijs is inbegrepen, maar de
voorwaarden van de verkoper kunnen aangeven dat dit afzonderlijk moet worden onderhandeld en betaald.
