Incoterms 2020 and everything you need to know about it!

Incoterms

About Ex Works :EXW

Delivery of goods at the point of departure at the origin (workplace). In this method, the seller delivers the goods to the buyer at the place of production or warehouse, and all costs, including loading, Transportation, insurance, customs and the risk of product damage is the responsibility of the buyer.

Responsibilities and risks

According to the rules Incoterms 2020 EXW means that the seller has fulfilled his obligations when the goods are made available to the buyer, usually at the seller's location.. The seller must pack the goods appropriately or in accordance with what is determined in the agreement between both parties. The buyer is responsible for loading the available goods and transporting them and other things necessary for the goods to reach their final destination. risk And the responsibility for the goods is transferred from the seller to the buyer when the goods are delivered at the designated place. This means that if damage occurs during the loading of the goods by the buyer, even if the seller helps in loading, the buyer is at risk..

The method of transporting goods

According to Incoterms 2020, EXW can be used for any mode of transport.

The exact place of delivery

The parties to the transaction must specify the exact place of cargo delivery in the contract, if this location is not specified accurately and with the agreement of the parties, the seller may deliver the cargo in a place that has a higher risk for the buyer.

Customs formalities for exporting goods

According to EXW, the goods are delivered to the buyer at the seller's warehouse, and after that, the seller has no responsibility for the rest of the way. Based on this, naturally, the seller is not responsible for carrying out the steps of exporting the goods and its transit, and these steps are the responsibility of the buyer.. Therefore, it is recommended to use this Incoterms mostly for local and domestic transactions and for Export For international goods, preferably use the FCA rule, where the cost and responsibility of exporting the goods is borne by the seller.

Inspection

Delivery of the goods to the buyer without paying the freight at the origin (Group F)

This group includes the terms by which the seller delivers the goods to the place designated by the buyer. The methods in this group include:

Abbreviation of the term Free Carrier(FCA)

According to Incoterms 2020, FCA means delivery of goods to the carrier at origin ( Delivery of goods in trucks, rails and airplanes ). Considering that the place of delivery is the seller's country, loading is with the buyer and the point of risk is the place of loading. The cost of shipping and insurance is with the buyer. The contract of carriage and insurance is concluded with the buyer (Not necessarily).

Abbreviation of the term Free Alongside Ship(FAS)

Delivery of goods next to the ship at the origin . The place of termination of the seller's risk is at the side of the ship in the port. The cost of shipping and insurance is with the buyer. Signing a contract of transportation, insurance and inspection with the buyer.

Abbreviation of the term Free On Board(FOB)

طبق قوانین اینکوترمز ۲۰۲۰ FOB به معنای تحویل کالا در عرشه کشتی در مبدا است. فروشنده وقتی کالا را از روی نرده کشتی عبور داد ریسک خود را خاتمه داده‌است. The cost of shipping and insurance is with the buyer. The contract of carriage from the port of delivery and insurance and inspection is concluded with the buyer.

Regarding the risks and responsibilities, the method of transportation, the place of delivery and so on… We will talk more about each of the above in future posts.

import export

Delivery of goods at the origin to the buyer with payment of freight (Group C)

This group includes terms by which the seller must pay the fare to the destination, but the risk of loss or damage and additional costs are borne by the buyer.. In this method, a kind of division of responsibility has been applied between the buyer and the seller. The methods in this group include:

Reduced Cost and Freight term(CFR)

According to the rules of Incoterms 2020, CFR means the cost and freight to the destination. C&F is the former, but for sea transportation . When the goods pass over the ship's rail (is loaded) The responsibility of the seller is terminated. The cost of insurance is with the buyer. The shipping cost is with the seller. An insurance contract is concluded with the buyer. and sign a shipping contract with the seller.

Abbreviation of the term Cost , Insurance and Freight(CIF)

According to the rules of Incoterms 2020, CIF means cost, insurance and freight to the destination. It is for sea transportation. The seller's responsibility ends when the goods are loaded over the ship's rail. The cost of shipping and insurance is with the seller. Signing a transport and insurance contract with the seller.

Abbreviation of the term Carriage Paid To(CPT)

According to the rules of Incoterms 2020, CPT means delivery with freight paid to the destination. Composite transportation is mostly used for land or air routes. The seller's risk and responsibility ends when the goods are delivered to the first carrier. Shipping cost with the seller to the specified point according to the contract. The cost of insurance is the responsibility of the buyer. An inspection contract is concluded with the buyer.

Abbreviation of the term Carriage and Insurance Paid to(CIP)

According to the rules of Incoterms 2020, CIP means delivery with payment of freight and insurance to the destination. The shipping method is composite. The seller's risk and responsibility ends when he delivers the goods to the agreed point. The cost of insurance and shipping is with the seller. The contract of insurance and transportation is concluded with the seller. An inspection contract is concluded with the buyer.

Delivery of goods at the destination (group D)

It includes terms whereby the seller is responsible for delivering the goods to the agreed point or location at the destination and the seller assumes all risks and costs..

Delivery at the specified locationDelivered at Place (DAP)

The seller is responsible for all the risks and costs associated with sending the goods to the place designated as the destination. DAP means that the buyer is responsible for all costs and risks associated with loading the goods and customs clearance for importing the goods to the specified destination country..

This term implies that the seller is also responsible for loading the goods. The seller clears the export goods and bears all the risks and costs related to the delivery of the goods and their loading at the terminal in the port or destination.. The buyer assumes responsibility for all costs and risks from the point of delivery onwards, including the clearance of goods for import in the destination country..

Delivery at the vacated site Delivered at Place Unloaded(DPU)

This rule used to be termed delivery at the terminal (THAT) It is known, but in Incoterms 2020 called (DPU) The name has been changed because the buyer and seller may want the delivery of the goods to take place somewhere other than the terminal.

Delivery of goods at the destination with payment of import customs dutiesDelivered Duty Paid (DDP)

According to the rules of Incoterms 2020, the DDP rule means that the seller bears all the risks and costs associated with sending the goods to the designated destination for loading and clearance for importation..

source: IXPORT

Commercial

Fahameh Industrial Engineering Company, authorized inspection company National Iranian Standards Organization And Central Bank, the provider of goods inspection services at the origin of countries all over the world and the destination of all customs of the country.