NATIONAL POLYTECHNIC INSTITUTE

SCHOOL OF COMMERCE AND ADMINISTRATION

SANTO TOMÁS UNIT

BACHELOR'S DEGREE IN INTERNATIONAL BUSINESS

INTERNATIONAL MARKETING AND PROMOTION

UNIT V

ACTIVITY 1: INCOTERMS

PROFESSOR: HERRERA GARRIDO PEDRO

SONIA MARISOL MERCADO VIEYRA

BALLOT: 20220A0660

GROUP: 3NX25
INCOTERMS Definition of Explanation Advantages Disadvantages
Incoterm of the term
EXW
EXW – Ex “Ex Works” In simple In the case of If there is any
Works means that terms, if you EXW, it is damage to the
the seller are the safe to say cargo during
delivers buyer and that the that loading
when it you are seller has process, that
places the buying the minimal risk and cost
goods at the goods from obligations, may still be
disposal of the seller on risks & costs yours as the
the buyer at EXWterms, whereas the buyer. It is
the seller’s you will buyer has all vital, therefore,
premises or need to send the risks and that this point
at another your truck to obligations. is clarified with
named place the seller’s the shipper
(i.e., works, premises beforehand at
factory, and collect the time of the
warehouse, the cargo signing of the
etc.). The from there sales contract.
seller does and take
not need to care of all
load the the other
goods on any shipping
collecting requirements
vehicle, nor to get it to
does it need your
to clear the destination.
goods for
export, where
such
clearance is
applicable.
FCA – Free “Free Carrier” In an FCA In the case of The point of
Carrier means that transaction, FCA the delivery needs
the seller the seller seller’s to be expressly
delivers the could be obligations, discussed and
goods to the involved in risks and agreed up on
carrier, or the actual costs are till between the
another movement of the agreed buyer and the
person the cargo up point of seller as the
nominated by to a certain delivery, and risk passes
the buyer at point. This the buyer’s from the seller
the seller’s point could be obligations, to the buyer at
premises, or the risks and that point.
another warehouse costs start
 named place. of the carrier, from that
the agreed point
warehouse of of delivery.
the buyer’s
agent, the
port or a
terminal in the
port or any
other location
agreed
between the
buyer and
seller.
CPT – “Carriage In a CPT In CPT, since It is crucial for
Carriage Paid to transaction, the contract the buyer and
Paid To “means that the seller is of carriage is seller to
the seller obliged to arranged by understand that
delivers the deliver the the seller at in a CPT
goods to the goods to the his expense, transaction, the
carrier, or agreed it is normal for “risk” passes
another destination. the seller to from seller to
person This agreed use his buyer once the
nominated by destination in service seller delivers
the seller at CPT term contract and the cargo to the
an agreed could be any also prepay first carrier,
place (if any place the cost of the whereas the
such place is expressly freight up to costs up to the
agreed agreed the named
between between the destination. destination will
parties) and buyer and Also, In CPT, still be for the
that the seller seller and will once the seller.
must contract most seller hands
for and pay commonly over the
the costs of be an goods to the
carriage overseas road carrier
necessary to destination. for further
bring the movement,
goods to the the “risk”
named place transfers from
of the seller to
destination. the buyer, but
the cost of the
movement till
the point of
destination
still remains
 with the
seller.
CIP – “Carriage In a CIP In CIP terms, The seller
Carriage and and transaction, while the must ensure
Insurance Insurance as the name buyer might that the buyer
Paid To Paid to suggests, enjoy the has paid for the
“means that apart from the benefits of the goods either
the seller delivery of insurance before
delivers the goods to the cover secured delivering the
goods to the named by the seller, goods
carrier, or destination, the buyer physically or
another the seller is must also be before issuing
person also obliged aware that in the bill of
nominated to arrange for CIP terms, lading another
by the seller insurance to the seller is release
at an agreed cover the only obliged documents to
place (if any buyer’s risk of to take the the buyer.
such place is lost soft or minimum
agreed damage to insurance
between the the goods coverage to
parties) and during cover the
that the carriage. buyer’s risks.
seller must
contract for
and pay the
costs of
carriage
necessary
to bring the
goods to the
named
place of
destination.
DAP – “Delivered In DAP terms, Buyers and If you are the
Delivered At at Place” the seller is sellers in seller, you may
Place means that obliged to trade blocs still be
the seller deliver the such as the responsible for
delivers cargo to a EU any damage if
when the mutually (European the goods were
goods are agreed Union) or not delivered
placed at the destination SADC inconformity
disposal of further than (Southern with the DAP
the buyer on the terminal. African term contract.
the arriving This agreed Development
means of terminal could Community)
transport be the may find the
 ready for buyer’s own DAP term
unloading at premises or useful as it
the named anyplace as allows for the
place of mutually movement of
destination. agreed. the cargo
The seller across
bears all borders
risks involved without any
in bringing extra
the goods to customs
the named clearance etc.
place.
DPU – “Delivered DPU may be The seller Another crucial
Delivered to at Place considered as bears all point to be
Place Unloaded” a natural risks involved remembered
Unloaded means that extension of up to the whether you
the seller DAP terms, named place are a seller or
delivers the as under of destination buyer is that
goods while DAP, the including the under DPU,
transferring seller is risk of moving neither the
the risk to the required to the goods buyer nor the
buyer when only deliver and unloading seller is
the goods ready for them. Under obliged to
are unloading DPU, both the insure the
unloaded whereas in delivery and goods and this
from the DPU the arrival at insurance
arriving seller delivers destination requirement is
means of when the are the same not specifically
transport at goods are and is the covered in the
the disposal placed at the only rule Incoterms
of the buyer disposal of which rules.
at the the buyer on requires the
named place the arriving seller to
of destination means of unload goods
or any other transport at the
agreed point including the destination.
within that unloading at
place. the named
place of
destination.
DDP – “Delivered DDP may be The seller Under DDP
Delivered Duty Paid” considered as bears all the terms neither
Duty Paid means that a term at costs and the buyer nor
the seller the other end risks involved the seller is
delivers the of the trade in bringing obliged to
goods when spectrum in the goods insure the
 the goods terms of to the place goods and this
are placed at obligations as of insurance
the disposal compared to destination requirement is
of the EXW where and has an not specifically
buyer, the buyer has obligation to covered in the
cleared for the clear the Incoterms
import on maximum goods not rules. This
the arriving obligation. In only for crucial issue
means of DDP, the export but must be
transport seller has also for discussed and
ready for the maximum import, to agreed upon as
unloading at obligation as pay any duty part of the
the named it involves for both sales contract
place of the delivery of export and and terms of
destination. the goods to important to sale.
the buyer at carry out all
the agreed customs
destination. formalities.
FAS – Free “Free Under FAS FAS term is As the terms
Alongside Alongside terms, the more suitable are FAS, you
Ship Ship” means seller is for non- as the buyer
that the required to containerized also need to
seller handle all cargo ensure that
delivers activities till because, in you enter into
when the the cargo is a container the correct
goods are delivered sized contract of
placed alongside the shipment, the carriage with
alongside ship. containers the shipping
the vessel cannot be line considering
(e.g., on a delivered where the risk
quay or a alongside the and cost of
barge) ship but the seller
nominated rather at ends and
by the buyer container where yours
at the named terminal. Due begins. There
port of to this, for could be
shipment. containerized certain gray
The risk of shipments areas in the
loss of or FCA(Free transaction
damage to Carrier) which mean
the goods maybe more you as the
passes suitable. buyer may
when the end up paying
goods are twice for the
alongside the activity.
ship, and the
 buyer bears
all costs
from that
moment
onwards.

SOURCES CONSULTED
IPN, (2011), Desing strategies and international distribution channels. Recuperado
de https://www.nsyp.aulapolivirtual.ipn.mx/pluginfile.php/20278/mod_assign/intro/
recursos/unidad_4/pdf/ut4_s6_intenational_distribution_channels.pdf