1

TOPIC 5:
INCOTERMS

Hoang Thi Lan Huong, PhD.

 2
INCOTERMS

u Official rules of the International Chamber of

Commerce relating to Delivery Terms
u Determine the rights and obligations of each party
in a sales transaction regarding the delivery of the
goods
u Memory aid: Delivery – conditions. Always seen
as the suppliers’ view
Hoang Thi Lan Huong, PhD.
 3
Application

u Transportation: expense for carriage

u Customs formalities for export-import of the goods
u Insurance
u Risks and losses during carriage of the goods

Hoang Thi Lan Huong, PhD.

 4
Incoterms rules’ evolution

u ICC – International Chamber of Commerce

initially issued in 1936
u Incoterms rules have been adjusted once per
decade
u 1953, 1967, 1976, 1980, 1990, 2000, 2010, and
2020.
u Incoterms 2020 – the latest version, effected since
Jan. 1st, 2020.

Hoang Thi Lan Huong, PhD.

 5
Terminologies

u Carrier: ……………………
u Customs formalities:
………………………………………………………………
………………………………………………………………
…………………………………….
u Delivery:
………………………………………………………………
………………………………………………………………
…………………………………………………….

Hoang Thi Lan Huong, PhD.

 6
Incoterms 2000

E EXW
F FCA, FAS, FOB
C CFR, CIF, CPT, CIP
D DAF, DES, DEQ, DDU, DDP
Always 3-lettercode plus named place
(port, place of receipt, …)
e.g.: CFR ANTWERP
Hoang Thi Lan Huong, PhD.
 7
Rules’ full names

u EXW:
u FCA:
u FAS:
u FOB:
u CFR:
u CIF:
u CPT:
u CIP:
Hoang Thi Lan Huong, PhD.
 8
Rules’ full names

u DAF:
u DES:
u DEQ:
u DDU:
u DDP:

Hoang Thi Lan Huong, PhD.

Incoterms 2000’s content
The seller’s obligations
A1. General obligations of the seller
A2. Licences, authorizations, security
clearances and other formalities
A3. Contracts of carriage and insurance
A4. Delivery
A5. Transfer of risks
A6. Allocation of costs
A7. Notices to the buyer
A8. Delivery document
A9. Check – packaging - marking
A10. Assistance with information and
related costs
Hoang Thi Lan Huong, PhD.
9
The buyer’s obligations
B1. General obligations of the buyer
B2. Licences, authorizations, security
clearances and other formalities
B3. Contracts of carriage and insurance
B4. Taking delivery
B5. Transfer of risks
B6. Allocation of costs
B7. Notices to the seller
B8. Proof of delivery
B9. Inspection of the goods
B10. Assistance with information and
related costs
 10

SELLER BUYER

transport
EXW risks
cost

transport
FCA risk
cost

transport
FAS risk
cost

transport
FOB risk
cost

Hoang Thi Lan Huong, PhD.

 11

SELLER BUYER

transport
CFR risk
cost

transport + insurance
CIF risk
cost

transport
CPT risk
cost

transport + insurance
CIP risk
cost

Hoang Thi Lan Huong, PhD.

 12

SELLER BUYER

transport + insurance
DAF risk
cost

transport + insurance
DES risk
cost

transport + insurance
DEQ risk
cost

transport + insurance
DDU risk
cost

transport + insurance
DDP risk
cost

Hoang Thi Lan Huong, PhD.

 13

Hoang Thi Lan Huong, PhD.

© 2006 TMT, All rights reserved 13
 14
Questions under Incoterms 2000

u Application: used only in International sale

contract?
u Delivered at Frontier: safe?
u Transfer of risks means Transfer of ownership
of the goods?
u If petroleum and oil under FOB, CFR, CIF…., is
ship’s rail considered as point of delivery
(transfer of risk)?
Hoang Thi Lan Huong, PhD.
 15
Moreover……….

u Free Trade Areas have been expanded

u Application of electronic communication

facilities

u Changes in transportation and international

commerce since 2000

Hoang Thi Lan Huong, PhD.

 16
Incorterms 2010 vs. 2000

u Incoterms: applicable to both international and

domestic sale contracts.
u Advice: EXW is suitable for domestic sale
contracts only
u Ownership of the goods: not adjusted by
Incoterms

Hoang Thi Lan Huong, PhD.

 17
Incoterms 2010

E EXW
F FCA, FAS, FOB
C CFR, CIF, CPT, CIP
D DAT, DAP, DDP
Always 3-lettercode plus named place
(port, place of receipt, …)
e.g.: CFR ANTWERP
Hoang Thi Lan Huong, PhD.
 18
Incorterms 2010

u 11 articles, divided into 2 distinct classes

u EXW, FCA, CPT, CIP, DAT, DAP, DDP:
rules for any modes of transport
u FAS, FOB, CFR, CIF: rules for sea and
inland waterway transport

Hoang Thi Lan Huong, PhD.

 19
DAT – Delivered at Terminal

u The seller delivers the goods when the goods,

u once …………..from the arriving means of transport,
u are placed at the disposal of the buyer at a named
terminal.
u TERMINAL:

Hoang Thi Lan Huong, PhD.

 20
DAT – Delivered at Terminal

u Used with ……. modes of transport

u The seller bears all risks involved in
………………………………………………..
u The seller is required to clear the goods for export,
where applicable
u The seller has …… obligation to clear the goods for
import

Hoang Thi Lan Huong, PhD.

 21
DAP – Delivered at Place

u The seller delivers the goods

u when the goods are placed at the disposal of
the buyer on the arriving means of transport,
u ……………………….at the named place of
destination.
u The seller is required to clear the goods for
export, ……. for import

Hoang Thi Lan Huong, PhD.

 22

Hoang Thi Lan Huong, PhD.

 23

Hoang Thi Lan Huong, PhD.

Incoterms 2010 – The reality
 24
Incoterms 2010
u EXW: the importer must conduct important
transactions in the exporting country à only
selected by …………………….importers
u DDP: the exporter must conduct important
transactions in the importing country à only for
…………….items
u EXW and DDP: have conflicts with the new EU
Customs Law (UCC): the responsibility of
exporters and importers for customs procedures.

Hoang Thi Lan Huong, PhD.

 25
Incoterms 2010

u FAS: rarely used, mainly applied to minerals and

grains.
u If the ship arrives late,
………………………………………..
u If the ship arrives early, the goods
……………………………………………….
u FCA: …………, ………… used. Allow delivery to be
made at multiple locations in the exporting country:
exporter's premises, port, bus station, airport, etc.

Hoang Thi Lan Huong, PhD.

 26
INCOTERMS 2020

Hoang Thi Lan Huong, PhD.

 Incoterms 2020’s content
The seller’s obligations
A1. General obligations
A2. Delivery
A3. Transfer of risks
A4. Carriage
A5. Insurance
A6. Delivery/transport document
A7. Export/Import clearance
A8. Check – packaging - marking
A9. Allocation of costs
A10. Notices
Hoang Thi Lan Huong, PhD.
27
The buyer’s obligations
B1. General obligations of the buyer
B2. Taking delivery
B3. Transfer of risks
B4. Carriage
B5. Insurance
B6. Delivery/transport document
B7. Export/Import clearance
B8. Check – packaging - marking
B9. Allocation of costs
B10. Notices
 28
Incoterms 2020

E EXW
F FCA, FAS, FOB
C CFR, CIF, CPT, CIP
D DAP, DPU, DDP
Always 3-lettercode plus named place
(port, place of receipt, …)
e.g.: CFR ANTWERP
Hoang Thi Lan Huong, PhD.
 Incoterms 2020 29

Hoang Thi Lan Huong, PhD.

 30

Hoang Thi Lan Huong, PhD.

 31

Hoang Thi Lan Huong, PhD.

Incoterms 2020 vs. 2010 ???
 32
Incoterms 2020 vs. 2010

u FCA:

u CIP:

u FCA, DAP, DPU, DDP:

Hoang Thi Lan Huong, PhD.