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Incoterms (International Commercial Terms)

Incoterms (International Commercial Terms) are a set of international sales terms widely used throughout the globe. Their purpose is to clarify transaction costs and responsibilities between
buyer and seller and reflect standard transportation practices. They are closely related to the U.N. Convention on Contracts for the International Sale of Goods.

• Group E - Departure:
EXW: Ex Works (designated place): the seller makes the goods available at his premises.

• Group F - Main Carriage Unpaid:


FCA: Free Carrier (designated place): the seller hands over the goods, cleared for export, into the custody of the first carrier (named by the buyer) at the designated place. This term is suitable
for all modes of transport, including carriage by air, rail, road, and containerized / multi-modal transport.

FAS: Free Alongside Ship (designated loading port): the seller must place the goods alongside the ship at the designated port. The seller must clear the goods for export; (this changed in the
2000 version of the Incoterms.) Suitable for maritime transport only.

FOB: Free On Board (designated loading port):an often-used maritime trade term, Free On Board: seller must load the goods on board the ship nominated by the buyer, cost and risk being
divided at ship's rail. The seller must clear the goods for export. Applicable to maritime transport only.

• Group C - Main Carriage Paid:


CFR: Cost and Freight (designated destination port): seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods
have crossed the ship's rail. Applicable to maritime transport only.

CIF: Cost, Insurance and Freight (designated destination port): the same as CFR except that the seller must in addition procure and pay for insurance for the buyer. Applicable to maritime
transport only.

CPT: Carriage Paid To (designated place of destination): the general/containerized/multimodal equivalent of CFR. The seller pays for carriage to the designated point of destination, but the risk
transfers when the goods are handed over to the first carrier.

CIP: Carriage and Insurance Paid to (designated place of destination): the containerized transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named
destination point, but risk transfers when the goods are handed over to the first carrier.

CTO: Container Terminal Order.

• Group D - Arrival:
DAF: Delivered At Frontier (designated place): It can be used when the goods are transported by rail and road. The seller pays for transportation to the designated place of delivery at the
frontier. The buyer arranges for customs clearance and pays for transportation from the frontier to his factory. The transfer of risk occurs at the frontier.

DES: Delivered Ex Ship (designated port): Where goods are delivered ex ship, the transfer of risk does not occur until the ship has arrived at the designated port of destination, and the goods
are made available for unloading to the buyer. The seller pays the same freight and insurance costs as he would under a CIF arrangement. Unlike CFR and CIF terms, the seller has agreed to
bear not just cost, but also Risk and Title up to the arrival of the vessel at the designated port. Costs for unloading the goods and any duties, taxes, etc. are for the Buyer. A commonly used term
in shipping bulk commodities, such as coal, grain, and dry chemicals, and where the seller either owns or has chartered their own vessel.

DEQ: Delivered Ex Quay (designated port): It means the same as DES, but the transfer of risk does not occur until the goods have been unloaded at the port of destination.

DDU: Delivered Duty Unpaid (designated destination place): This means that the seller delivers the goods to the buyer to the designated place of destination in the contract of sale. The goods
are not cleared for import or unloaded from any form of transport at the place of destination. The buyer is responsible for the costs and risks for the unloading, duty and any subsequent delivery
beyond the place of destination. However, if the buyer wants the seller to bear cost and risks associated with the import clearance, duty, unloading and subsequent delivery beyond the place of
destination, then this all needs to be explicitly agreed on in the contract of sale.

DDP: Delivered Duty Paid (designated destination place): It means that the seller pays for all transportation costs and bears all risk until the goods have been delivered and also pays the duty.
Often used interchangeably with the term "Free Domicile".
Responsibilities of the Seller

With regards to the terms below, "Yes" indicates that the seller has the responsibility to provide the service included in the price. "No" indicates it is the buyer's responsibility. If insurance is not
included in the term (for example, CFR) then insurance for the transport is the responsibility of the buyer.

Landing Unload onto trucks


Load to Export- duty Transport to Unload from truck Transport to Landing charges Transport to Entry -Customs Entry
charges at from the importers' Insurance
truck payment exporter's port at the origin's port import's port at importer's port destination clearance -Taxation
origin's port port
EXW N. N. N. N. N. N. N. N. N. N. N. N.
FCA Y. Y. Y. N. N. N. N. N. N. N. N. N.
FAS Y. Y. Y. Y. N. N. N. N. N. N. N. N.
FOB Y. Y. Y. Y. Y. N. N. N. N. N. N. N.
CFR Y. Y. Y. Y. Y. Y. N. N. N. N. N. N.
CIF Y. Y. Y. Y. Y. Y. N. N. N. Y. N. N.
CPT Y. Y. Y. Y. Y. Y. N. N. N. N. N. N.
CIP Y. Y. Y. Y. Y. Y. N. N. N. Y. N. N.
DAF Y. Y. Y. Y. Y. Y. N. N. N. N. N. N.
DES Y. Y. Y. Y. Y. Y. N. N. N. Y. N. N.
DEQ Y. Y. Y. Y. Y. Y. Y. N. N. Y. N. N.
DDU Y. Y. Y. Y. Y. Y. Y. Y. Y. Y. Y. N.
DDP Y. Y. Y. Y. Y. Y. Y. Y. Y. Y. Y. Y.
INCOTERMS
Language is one of the most complex and important tools of International Trade. As in any complex and
sophisticated business, small changes in wording can have a major impact on all aspects of a business agreement.

Word definitions often differ from industry to industry. This is especially true of global trade. Where such
fundamental phrases as "delivery" can have a far different meaning in the business than in the rest of the world.

For business terminology to be effective, phrases must mean the same thing throughout the industry. That is why the
International Chamber of Commerce created "INCOTERMS" in 1936. INCOTERMS are designed to create a
bridge between different members of the industry by acting as a uniform language they can use.

Each INCOTERM refers to a type of agreement for the purchase and shipping of goods internationally. There are
13 different terms, each of which helps users deal with different situations involving the movement of goods. For
example, the term FCA is often used with shipments involving Ro/Ro or container transport; DDU assists with
situations found in intermodal or courier service-based shipments.

INCOTERMS also deal with the documentation required for global trade, specifying which parties are responsible
for which documents. Determining the paperwork required to move a shipment is an important job, since
requirements vary so much between countries. Two items, however, are standard: the commercial invoice and the
packing list.

INCOTERMS were created primarily for people inside the world of global trade. Outsiders frequently find them
difficult to understand. Seemingly common words such as "responsibility" and "delivery" have different meanings in
global trade than they do in other situations.
In global trade, "delivery" refers to the seller fulfilling the obligation of the terms of sale or to completing a
contractual obligation. "Delivery" can occur while the merchandise is on a vessel on the high seas and the parties
involved are thousands of miles from the goods. In the end, however, the terms wind up boiling down to a few basic
specifics:

Costs: who is responsible for the expenses involved in a shipment at a given point in the
shipment's journey?
Control: who owns the goods at a given point in the journey?
Liability: who is responsible for paying damage to goods at a given point in a shipment's
transit?

It is essential for shippers to know the exact status of their shipments in terms of ownership and responsibility. It is
also vital for sellers & buyers to arrange insurance on their goods while the goods are in their "legal" possession.
Lack of insurance can result in wasted time, lawsuits, and broken relationships.

INCOTERMS can thus have a direct financial impact on a company's business. What is important is not the
acronyms, but the business results. Often companies like to be in control of their freight. That being the case, sellers
of goods might choose to sell CIF, which gives them a good grasp of shipments moving out of their country, and
buyers may prefer to purchase FOB, which gives them a tighter hold on goods moving into their country.

In this glossary, we'll tell you what terms such as CIF and FOB mean and their impact on the trade process. In
addition, since we realize that most international buyers and sellers do not handle goods themselves, but work
through customs brokers and freight forwarders, we'll discuss how both fit into the terms under discussion.

INCOTERMS are most frequently listed by category. Terms beginning with F refer to shipments where the primary
cost of shipping is not paid for by the seller. Terms beginning with C deal with shipments where the seller pays for
shipping. E-terms occur when a seller's responsibilities are fulfilled when goods are ready to depart from their
facilities. D terms cover shipments where the shipper/seller's responsibility ends when the goods arrive at some
specific point. Because shipments are moving into a country, D terms usually involve the services of a customs
broker and a freight forwarder. In addition, D terms also deal with the pier or docking charges found at virtually all
ports and determining who is responsible for each charge.

Recently the ICC changed basic aspects of the definitions of a number of INCOTERMS, buyers and sellers should
be aware of this. Terms that have changed have a star alongside them.

EX-Works
One of the simplest and most basic shipment arrangements places the minimum responsibility on the seller with
greater responsibility on the buyer. In an EX-Works transaction, goods are basically made available for pickup at the
shipper/seller's factory or warehouse and "delivery" is accomplished when the merchandise is released to the
consignee's freight forwarder. The buyer is responsible for making arrangements with their forwarder for insurance,
export clearance and handling all other paperwork.

FOB (Free On Board)


One of the most commonly used-and misused-terms, FOB means that the shipper/seller uses his freight forwarder to
move the merchandise to the port or designated point of origin. Though frequently used to describe inland
movement of cargo, FOB specifically refers to ocean or inland waterway transportation of goods. "Delivery" is
accomplished when the shipper/seller releases the goods to the buyer's forwarder. The buyer's responsibility for
insurance and transportation begins at the same moment.

FCA (Free Carrier)


In this type of transaction, the seller is responsible for arranging transportation, but he is acting at the risk and the
expense of the buyer. Where in FOB the freight forwarder or carrier is the choice of the buyer, in FCA the seller
chooses and works with the freight forwarder or the carrier. "Delivery" is accomplished at a predetermined port or
destination point and the buyer is responsible for Insurance.

FAS (Free Alongside Ship)*


In these transactions, the buyer bears all the transportation costs and the risk of loss of goods. FAS requires the
shipper/seller to clear goods for export, which is a reversal from past practices. Companies selling on these terms
will ordinarily use their freight forwarder to clear the goods for export. "Delivery" is accomplished when the goods
are turned over to the Buyers Forwarder for insurance and transportation.

CFR (Cost and Freight)


This term formerly known as CNF (C&F) defines two distinct and separate responsibilities-one is dealing with the
actual cost of merchandise "C" and the other "F" refers to the freight charges to a predetermined destination point. It
is the shipper/seller's responsibility to get goods from their door to the port of destination. "Delivery" is
accomplished at this time. It is the buyer's responsibility to cover insurance from the port of origin or port of
shipment to buyer's door. Given that the shipper is responsible for transportation, the shipper also chooses the
forwarder.

CIF (Cost, Insurance and Freight)


This arrangement similar to CFR, but instead of the buyer insuring the goods for the maritime phase of the voyage,
the shipper/seller will insure the merchandise. In this arrangement, the seller usually chooses the forwarder.
"Delivery" as above, is accomplished at the port of destination.

CPT (Carriage Paid To)


In CPT transactions the shipper/seller has the same obligations found with CIF, with the addition that the seller has
to buy cargo insurance, naming the buyer as the insured while the goods are in transit.

CIP (Carriage and Insurance Paid To)


This term is primarily used for multimodal transport. Because it relies on the carrier's insurance, the shipper/seller is
only required to purchase minimum coverage. When this particular agreement is in force, Freight Forwarders often
act in effect, as carriers. The buyer's insurance is effective when the goods are turned over to the Forwarder.

DAF (Delivered At Frontier)


Here the seller's responsibility is to hire a forwarder to take goods to a named frontier, which usually a border
crossing point, and clear them for export. "Delivery" occurs at this time. The buyer's responsibility is to arrange with
their forwarder for the pick up of the goods after they are cleared for export, carry them across the border, clear them
for importation and effect delivery. In most cases, the buyer's forwarder handles the task of accepting the goods at
the border across the foreign soil.

DES (Delivered Ex Ship)


In this type of transaction, it is the seller's responsibility to get the goods to the port of destination or to engage the
forwarder to the move cargo to the port of destination uncleared. "Delivery" occurs at this time. Any destination
charges that occur after the ship is docked are the buyer's responsibility.

DEQ (Delivered Ex Quay)*


In this arrangement, the buyer/consignee is responsible for duties and charges and the seller is responsible for
delivering the goods to the quay, wharf or port of destination. In a reversal of previous practice, the buyer must also
arrange for customs clearance.

DDP (Delivered Duty Paid)


DDP terms tend to be used in intermodal or courier-type shipments. Whereby, the shipper/seller is responsible for
dealing with all the tasks involved in moving goods from the manufacturing plant to the buyer/consignee's door. It is
the shipper/seller's responsibility to insure the goods and absorb all costs and risks including the payment of duty
and fees.
DDU (Delivered Duty Unpaid)
This arrangement is basically the same as with DDP, except for the fact that the buyer is responsible for the duty,
fees and taxes

Ocean Container Dimensions


STANDARD 20'

INSIDE LENGTH 19'4" 5.89 m


INSIDE WIDTH 7'8" 2.33 m
INSIDE HEIGHT 7'10" 2.38 m
DOOR WIDTH 7'8" 2.33 m
DOOR HEIGHT 7'6" 2.28 m
CAPACITY 1,172 ft³ 33.18 m³
TARE WEIGHT 4,916 lb 2,229 kg
MAX. CARGO 47,999 lb 21,727 kg

STANDARD 40' HIGH CUBE 40'

INSIDE LENGTH 39'5" 12.01 39'5" 12.01


INSIDE WIDTH 7'8" m 7'8" m
INSIDE HEIGHT 7'10" 2.33 m 8'10' 2.33 m
DOOR WIDTH 7'8" 2.38 m 7'8" 2.69 m
DOOR HEIGHT 7'6" 2.33 m 8'5" 2.33 m
CAPACITY 2,390 2.28 m 2,694 2.56 m
TARE WEIGHT ft³ 67.67 ft³ 76.28
MAX. CARGO 8,160 m³ 8,750 m³
lb 3,701 lb 3,968
59,040 kg 58,450 kg
lb 26,780 lb 26,512
kg kg

OPEN TOP 20' OPEN TOP 40'


(upgraded also
available)

INSIDE LENGTH 19'4" 5.89 m 39'5" 12.01


INSIDE WIDTH 7'7" 2.31 m 7'8" m
INSIDE HEIGHT 7'8" 2.33 m 7'8" 2.33 m
DOOR WIDTH 7'6" 2.28 m 7'8" 2.33 m
DOOR HEIGHT 7'2" 2.18 m 7'5" 2.33 m
CAPACITY 1,136 32.16 2,350 2.26 m
TARE WEIGHT ft³ m³ ft³ 66.54
MAX. CARGO 5,280 2,394 8,490 m³
lb kg lb 3,850
47,620 21,600 58,710 kg
lb kg lb 26,630
kg

REEFER 20' REEFER 40'

INSIDE LENGTH 17'8" 5.38 m 37'8" 11.48


INSIDE WIDTH 7'5" 2.26 m 7'5" m
INSIDE HEIGHT 7'5" 2.26 m 7'2" 2.26 m
DOOR WIDTH 7'5" 2.26 m 7'5" 2.18 m
DOOR HEIGHT 7'3" 2.20 m 7'0" 2.26 m
CAPACITY 1,000 28.31 2,040 2.13 m
TARE WEIGHT ft³ m³ ft³ 57.76
MAX. CARGO 7,040 3,193 10,780 m³
lb kg lb 4,889
45,760 20,756 56,276 kg
lb kg lb 25,526
kg
FLAT RACK 20' FLAT RACK 40'

INSIDE LENGTH 18'5" 5.61 m 39'7" 12.06


INSIDE WIDTH 7'3" 2.20 m 6'10" m
INSIDE HEIGHT 7'4" 2.23 m 6'5" 2.08 m
TARE WEIGHT 5,578 2,530 12,081 1.95 m
MAX. CARGO lb kg lb 5,479
47,333 21,469 85,800 kg
lb kg lb 38,918
kg

FLAT RACK FLAT RACK


COLLAPSIBLE COLLAPSIBLE
20' 40'

INSIDE LENGTH 18'6" 5.63 m 39'7" 12.06


INSIDE WIDTH 7'3" 2.20 m 6'10" m
INSIDE HEIGHT 7'4" 2.23 m 6'5" 2.08 m
TARE WEIGHT 6,061 2,749 12,787 1.95 m
MAX. CARGO lb kg lb 5,800
61,117 27,722 85,800 kg
lb kg lb 38,918
kg
PLATFORM 20' PLATFORM 40'

INSIDE LENGTH 19'11" 6.07 m 40'0" 12.19


INSIDE WIDTH 8'0" 2.43 m 8'0" m
INSIDE HEIGHT 7'4" 2.23 m 6'5" 2.43 m
TARE WEIGHT 6,061 2,749 12,783 1.95 m
MAX. CARGO lb kg lb 5,798
52,896 23,993 66,397 kg
lb kg lb 30,117
kg

Air Container Dimensions

Main Deck Pallet


(Equivalent to IATA Type 2)
External Displacement:
606 cu ft/17.16 cu m
Maximum Gross Weight:
15,000 lb/6,804 kg
Maximum External Dimensions:
(L x W x H) Contoured
125" x 96" x 96"
317cm x 244cm x 244cm

LD-7
(Equivalent to IATA Type 5)
External Displacement:
379.9 cu ft/10 cu m
Maximum Gross Weight:
10,200 lb/4,627 kg
Maximum External Dimensions:
(L x W x H) Contoured
125" x 88" x 63"
317 cm x 223 cm x 160 cm
P9A Lower Deck Pallet
(Equivalent to IATA Type 6)
External Displacement:
242 cu ft/6.9 cu m
Maximum Gross Weight:
7,000 lb/3,175 kg
Maximum External Dimensions:
(L x W x H) Contoured
125" x 60" x 63"
317 cm x 152 cm x 160 cm

LD-11
(Equivalent to IATA Type 6)
Internal Capacity:
242 cu ft/6.9 cu m
Maximum Gross Weight:
7,000 lbs/3,176 kg
Maximum External Dimensions:
(L x W x H) Contoured
125" x 60" x 64"
317 cm x 162 cm x 162 cm

LD-8
(Equivalent to IATA Type 6A)
Internal Capacity:
243 cu ft/6.9 cu m
Maximum Gross Weight:
5,400 lb/2,450 kg
Maximum External Dimensions:
(L x W x H) Contoured
96" x 60" x 64"
228 cm x 152 cm x 162 cm

LD-4
(Equivalent to IATA Type 7A)
Internal Capacity:
174 cu ft/5 cu m
Maximum Gross Weight:
5,400 lb/2,450 kg
Maximum External Dimensions:
(L x W x H) Contoured
96" x 60" x 64"
228 cm x 152 cm x 162 cm
LD-3
(Equivalent to IATA Type 8)
Internal Capacity:
150 cu ft/4 cu m
Maximum Gross Weight:
3,500 lb/1,588 kg
Maximum External Dimensions:
(L x W x H) Contoured
61" x 60" x 64"
154 cm x 152 cm x 162 cm

LD-2
(Equivalent to IATA Type 8D)
Internal Capacity:
120 cu ft/3 cu m
Maximum Gross Weight:
2,700 lb/1,225 kg
Maximum External Dimensions:
(L x W x H) Contoured
47" x 60" x 64"
119 cm x 152 cm x 162 cm

Metric to U.S. / U.S. to Metric


Metric to U.S. Conversions
Metric Measure Multiplied By Equals U.S. Measure

Length
millimeter x 0.0394 = inches

centimeter x 0.3937 = inches

meters x 3.2808 = feet

meters x 1.0936 = yards

kilometers x 0.6214 = miles

Area
sq. cm. x 0.155 = sq. inches

sq. meters x 1.1960 = sq. yards

sq. meters x 0.3861 = sq. miles


hectares x 2.4710 = acres

Weight
grams x 0.0353 = ounces

kilograms x 2.2046 = pounds

tonnes x 1.1 = short tons

Volume
milliliters x 0.0338 = fluid ounces

liters x 2.1134 = pints

liters x 1.0567 = quarts

liters x 0.2642 = gallons

cu. meters x 35.3145 = cubic feet

cu. meters x 1.3079 = cubic yards

Temperature
centigrade x 1.8(+32) = fahrenheit

temperature temperature

To calculate the approximate U.S. measure equivalent to a known metric measure, simply multiply the metric
quantity by the conversion factor in the center column. Example: 38 kilograms = 84 pounds, approximately (38 x
2.2046 = 83.78).

U.S. to Metric Conversions


U.S. Measure Multiplied By Equals Metric Measure

Length
inches x 2.54 = centimeters

feet x 30.48 = centimeters

yards x x 0.9144 = meters

miles x 1.6093 = kilometers

Area
sq. inches x 6.452 = sq. cm.

sq. feet x 0.0929 = sq. meters

sq. yards x 0.8361 = sq. meters

sq. miles x 2.59 = sq. kilometers

acres x 0.4047 = hectares

Weight
ounces x 28.3495 = grams

pounds x 0.4536 = kilograms

short tons x 0.9072 = tonnes

Volume
fluid ounces x 29.574 = milliliters

pints x 0.4732 = liters

quarts x 0.9463 = liters

gallons x 3.7853 = liters

cubic feet x 0.0283 = cubic meters

cubic yards x 0.7646 = cubic meters

Temperature
fahrenheit -32(/1.8) = centigrade

temperature temperature

To calculate the approximate metric measure equivalent to a U.S. measure, simply multiply the U.S. quantity by the
conversion factor in the center column. Example: 563 miles = 900 kilometers, approximately (563 x 1.6093 =
906.04).

Metric Basics
The three basic metric units are the meter (length), the gram (weight), and the liter
(volume). The key to metric prefixes are:

• 1000 = kilo
• 100 = hecto
• 10 = deca
• 0.1 = deci
• 0.01 = centi
• 0.001 milli

COMMON MEASUREMENTS
Length

1 kilometer = 0.62137 mi

1 meter = 3.2808 ft

1 centimeter = 0.3937 in

1 mile = 1.6093 km

1 foot = 0.3048 m

1 inch = 2.54 cm

Weight

1 kilogram = 2.2046 lbs

1 gram = 0.0353 oz

1 short ton = 907.1847 kilos

1 pound = 0.4536 kilos

1 ounce = 28.3495 g

Volume

1 hectoliter = 100 l = 0.1 m³ = 26.4172 gal

1 liter = 100 cl = 1 dm³ = 1.0567 qt

1 gallon (U.S.) = 3.7853 l

1 cubic inch = 16.3871 cm³

Area

1 square kilometer = 1 million m² = 0.3861 mi²


1 hectare = 10,000 m² = 2.471 acres

1 square meter = 10.7639 ft² = 1550.003 in²

1 square mile = 640 acres = 258.9988 ha²

1 square foot = 144 in² = 929.0304 cm²

EASY CONVERSIONS

Symbol If You Know Multiply By To Find Symbol

mm millimeters 0.03937 inches in

cm centimeters 0.3937 inches in

m meters 3.3 feet ft

m meters 1.1 yards yd


Length
km kilometers 0.62 miles mi

in inches 2.54 centimeters cm

ft feet 30.48 centimeters cm

yd yards 0.9144 meters m

cm² square centimeters 0.16 square inches in²

m² square meters 1.2 square yards yd²

km² square kilometers 0.4 square miles mi²

ha² hectares (10,000 m2) 2.5 acres


Area
in² square inches 6.5 square centimeters cm²

ft² square feet 0.09 square meters m²

yd² square yards 0.8 square meters m²

mi² square miles 2.6 square kilomters km²


g grams 0.035 ounce oz

kg kilograms 2.2046 pounds lb

tonnes
Weight t 1.1 short tons
(1,000 kq)

oz ounces 28.3495 grams g

lb pounds 0.45 kilograms kg

ml milliliters 0.03 fluid ounces fl oz

l liters 2.1 pints pt

l liters 1.06 quarts qt

l liters 0.26 gallons gal

m³ cubic meters 35.314 cubic feet ft³

m³ cubic meters 1.3 cubic yards yd³

tsp teaspoons 5 milliliters ml

Volume tbsp tablespoons 15 milliliters ml

fl oz fluid ounces 30 milliliters ml

c cups 0.24 liters l

pt pints 0.47 liters l

qt quarts 0.97 liters l

gal gallons 3.8 liters l

ft³ cubic feet 0.03 cubic meters m³

yd³ cubic yards 0.76 cubic meters m³

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