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When Buying & Selling...

The following information is meant to serve only as a guide when making INCOTERMS® selections. For further analysis and questions on your unique situation, please contact Star USA.

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International Commercial Terms

General Information

INCOTERMS® 2020 should be set in the purchasing or sales agreement, but may vary on an order-by-order basis. It is important that all participants in the process be aware of the impact when establishing INCOTERMS® Rules. Preferred INCOTERMS® may vary based on the mode of transport (Air vs. Ocean), the regions involved (Asia vs. North America, for example), the role of the parties involved, the commodity being bought or sold, and the terms of sale.

Risk, Cost, & Responsibility

INCOTERMS® Rules dictate the transfer of risk and responsibility, as well as which party is responsible for specific aspects of the transaction – including the payment of duties, the import and export clearance of the goods, the arrangement and payment of freight, and more.

Title Transfer

Title transfer is not governed by INCOTERMS® 2020; transfer of title is established in the purchasing or sales agreement, or as specified in the Terms and Conditions Contract.

INCOTERMS® 2020 Training Video

This webinar provides insight on using the INCOTERMS® rules in your International Supply Chain.

You will learn:

  • Applications and limitations of the Incoterms® rules
  • Advantages for purchasing & procurement
  • Advantages for sales & customer service
  • How INCOTERMS® rules impact your Total Landed Cost
  • Choosing & avoiding risk to maximize market advantage
Relevant changes in INCOTERMS® 2020 compared to INCOTERMS® 2010:
  • DAT (Delivered at Terminal) is renamed DPU (Delivered at Place Unloaded)
  • FCA (Free Carrier) now allows for Bills of Lading to be issued after loading
  • CIF (Cost, Insurance and Freight) and CIP (Carriage and Insurance Paid To) set out new standard insurance arrangements, but the level of insurance continues to be negotiable.
  • Where listed, cost allocation is stated more precisely
  • FCA (Free Carrier), DAP (Delivered at Place), DPU (Delivered at Place Unloaded) and DDP (Delivered Duty Paid) now take account of parties arranging their own transport rather than using a third party provider.
  • Security-related obligations are easier to understand.
  • “Explanatory Notes for Users” for each Incoterm® have replaced the Guidance Notes.
  • CIP now requires as default insurance coverage ICC A or equivalent. It was ICC C under Incoterms® 2010. Required insurance coverage under CIF remains

Transportation Key

All Modes of Transportation

EXWEx Works

FCAFree Carrier

CPTCarriage Paid To

CIPCarriage & Insurance Paid To

DAPDelivered At Place

DPUDelivered At Place Unloaded

DDPDelivered Duty Paid

Vessel — Sea & Inland Waterway Only

FASFree Alongside Ship

FOBFree On Board

CFRCost & Freight

CIFCost Insurance & Freight

Importing

Canada to USA

You Pay Freight


LandFCAOrigin Point


Air FCAOrigin Airport


WaterFCAOrigin Port


Customer Pays Freight


LandDAPDestination Point


AirDAPDestination Airport


WaterDAPDestination Port


Mexico to USA

You Pay Freight


Land(Call for Guidance)


AirFCAOrigin Airport


WaterFCAOrigin Port


Customer Pays Freight


Land DAPDestination Point


Air DAPDestination Airport


WaterDAPDestination Port


Rest of World to USA

You Pay Freight


Air FCAOrigin Airport


WaterFCAOrigin Port


Customer Pays Freight


AirDAPDestination Airport


WaterDAPDestination Port


Exporting

USA to Canada

You Pay Freight


LandCPTCustomer


AirDAPDestination Airport


WaterCPTDestination Port


Customer Pays Freight


LandFCAOrigin Point


AirFCAOrigin Airport


WaterFCAOrigin Port


USA to Mexico

You Pay Freight


Land(Call for Guidance)


AirDAPDestination Airport


WaterCPTDestination Port


Customer Pays Freight


LandFCAOrigin Point


AirFCAOrigin Airport


WaterFCAOrigin Port


USA to Rest of World

You Pay Freight


AirDAPDestination Airport


WaterCPTDestination Port


Customer Pays Freight


AirFCAOrigin Airport


WaterFCAOrigin Port


Multimodal Transportation

Buyer / Seller Responsibility

Service/ Event EXW FCA CPT CIP DAP DPU DDP
Export Pack Seller Seller Seller Seller Seller Seller Seller
Mark & Label Seller Seller Seller Seller Seller Seller Seller
Block & Brace Buyer Buyer Buyer Buyer Buyer Buyer Buyer
Export Clearance (License, EEI/AES) Buyer Seller Seller Seller Seller Seller Seller
Arrange Insurance Either Either Either Seller Either Either Either
Select Carrier Buyer Buyer Seller Seller Seller Seller Seller
Select Freight Forwarder Buyer Buyer Seller Seller Seller Seller Seller
Arrange & Pay Pre-Carriage Buyer Either Seller Seller Seller Seller Seller
Pay Origin Terminal Charges Buyer Either Seller Seller Seller Seller Seller
Arrange & Pay Main Carriage Buyer Buyer Buyer Buyer Seller Seller Seller
Load Main Carriage Buyer Buyer Seller Seller Seller Seller Seller
Pay Destination Terminal Charges Buyer Buyer Either Either Either Either Seller
Arrange & Pay On-Carriage Buyer Buyer Either Either Either Either Seller
Arrange & Pay Import Clearance Buyer Buyer Buyer Buyer Buyer Buyer Seller
Pay Duties, Taxes & Fees Buyer Buyer Buyer Buyer Buyer Buyer Seller
Unload From On-Carriage Buyer Buyer Buyer Buyer Buyer Seller Buyer

Applying these terms

EXW

Seller places shipment at disposal of buyer at Seller’s facility. Seller is not responsible to load buyer’s carrier. Export clearance is buyer’s responsibility.

FCA

Seller delivers shipment to Buyer’s selected carrier at “F” geographic location. Seller loads first carrier.

CPT   CIP

Seller arranges transport to “C” delivery port or place. “I” requires seller to obtain minimum insurance coverage. Seller fulfills delivery obligation upon delivery to carrier.

DAP   DPU   DDP

Seller arranges and delivers to destination place.

DAP - Delivered at place
DPU - Delivered at place unloaded
DDP - Delivered Duty Paid


Qualifiers: EXW Seller's Facility


Risk Transfers: Seller's Premises


Freight: Collect from EXW point



Qualifiers: FCA Seller's Facility

FCA Forwarder's Warehouse (Seller's Country)

FCA Airport (Seller's Country)

FCA Steamship Terminal (Seller's Country)


Risk Transfers: Named Place of Delivery


Freight: Collect from F Delivery Point



Qualifiers: CPT or CIP Destination Airport

CPT or CIP Destination Terminal

CPT or CIP Buyer's Destination


Risk Transfers: At point cargo delivered to carrier


Freight: Prepaid by seller to destination port or place



Qualifiers: FCA Seller's Facility

DPU, DAP, DDP Destination Airport

DPU, DAP, DDP Destination Terminal

DPU, DAP, DDP Buyer's Destination


Risk Transfers: Named Place of Delivery


Freight: Prepaid by seller to destination port or place


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