Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué.

2020

2020
Incoterms
 What are the INCOTERMS
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

The INCOTERMS ® (International

Commerce Terms) rules explain a
set of commercial terms of three
letters that use inter-company uses
in the purchase and sale contracts
of goods.
The Incoterms® rules mainly
describe the tasks, costs and risks
involved in the delivery of
merchandise from the seller
company to the buyer.
 What are the Incoterms for?
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Delivery conditions

Assumption of risks by each party

Distributions of the expenses

Customs formalities
Transport and insurance
 Incoterms groups
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Any mode of transport Sea and inland waterway transport

EXW: Ex Works FAS: Free Alongside Ship

FCA: Free Carrier FOB: Free On Board
CPT: Carriage Paid To CFR: Cost and Freight
CIP: Cost, Insurance and CIF: Cost, Insurance and Freight
Freight
DAP: Delivery At Place
DPU: Delivered
Unloaded
DDP: Delivery Duty Paid
 Transfer of the cost & risk
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Family E-F: EXW – FAS – FOB – FCA →Transport´s costs and

risk are transferred in the Country of Origin.
Family C: CPT – CIP – CFR – CIF →Transport´s costs and risk
are not transferred simultaneously. Costs on the country of
destination and risk country of origin.
Family D: DDP – DAP – DPU → Transport´s costs and risk
are transferred when the exporter gives the merchandise to
the importer in the country of destination.
 EXW - Ex Work
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the seller (exporter)

• Packing and packaging of the merchandise.
• To place the merchandise at the buyer's disposal in the
establishment of the seller.
 EXW - Ex Work
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the buyer (importer)

• To pay and load the merchandise
• Transportation in the country of origin
• Export customs formalities
• Handling at origin
• International Transport
• Insurance
• Handling at destination
• Import customs Formalities
• Transportation in the country of destination
 EXW - Ex Work
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

EXW Package and

packaging
Load in
origin
Transportation Customs
in origin formalities
Handling at
origin
International Insurance
Transportation
Handling at Customs
destination formalities
Transportation Unload in
in destination destination
Delivery to
the buyer

Cost
Risk
 FCA – Free Carrier
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the seller (exporter)

• Packing and packaging of the merchandise.
• Deliver the goods to the carrier designated by the Buyer at the
agreed place - Transportation in the country of origin
• To load the merchandise (Country of origin)
• Transportation in the country of origin*
• Export customs formalities*
 FCA – Free Carrier
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the buyer (importer)

• To pay for the merchandise
• Handling at origin*
• To load the merchandise in the main mean of transportation*
• International Transport
• Insurance
• Handling at destination
• Import customs Formalities
• Transportation in the country of destination
 FCA – Free Carrier
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

FCA Package and

packaging
Load in
origin
Transportation Customs
in origin formalities
Handling at
origin
International Insurance
Transportation
Handling at Customs
destination formalities
Transportation Unload in Delivery to
in destination destination the buyer

Cost
Risk
 FAS – Free Alongside Ship
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the seller (exporter)

• Packing and packaging of the merchandise.
• To load the merchandise
• Transportation in the country of origin
• Export customs formalities
• Handling at origin – Put the merchandise next to the Ship.
 FAS – Free Alongside Ship
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the buyer (importer)

• To pay for the merchandise
• To load the merchandise on the ship
• International transportation
• To download the merchandise
• Import customs formalities
• Transportation in the country of destination
 FAS – Free Alongside Ship
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

FAS Package and

packaging
Load in
origin
Transportation Customs
in origin formalities
Handling at
origin
International Insurance
Transportation
Handling at Customs
destination formalities
Transportation Unload in
in destination destination
Delivery to
the buyer

Cost
Risk
 FOB – Free On Board
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the seller (exporter)

• Packing and packaging of the merchandise.
• To load the merchandise
• Transportation in the country of origin
• Export customs formalities
• Handling at origin – To load the merchandise on the Ship.
 FOB – Free On Board
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the buyer (importer)

• To pay for the merchandise
• International transportation
• Insurance
• To download the merchandise
• Import customs formalities
• Transportation in the country of destination
 FOB – Free On Board
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

FOB Package and

packaging
Load in
origin
Transportation Customs
in origin formalities
Handling at
origin
International Insurance
Transportation
Handling at Customs
destination formalities
Transportation Unload in
in destination destination
Delivery to
the buyer

Cost
Risk
 CPT-Carrier Paid To
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the seller (exporter)

• Packing and packaging of the merchandise.
• To load the merchandise
• Transportation in the country of origin
• Export customs formalities
• Handling at origin
• International transportation
• Unload in the port of destination *
 CPT-Carrier Paid To
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the buyer (importer)

• To pay for the merchandise
• Unload in the port of destination *
• Insurance
• Import customs formalities
• Transportation in the country of destination
 CPT-Carrier Paid To
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

CPT Package and

packaging
Load in
origin
Transportation Customs
in origin formalities
Handling at
origin
International Insurance
Transportation
Handling at Customs
destination formalities
Transportation Unload in
in destination destination
Delivery to
the buyer

Cost
Risk
 CIP - Cost and
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Insurance paid to
Obligations of the seller (exporter)
• Packing and packaging of the merchandise.
• To load the merchandise
• Transportation in the country of origin
• Export customs formalities
• Handling at origin
• Insurance ($M + 10%)
• International transportation
• Download in the port of destination *
 CIP - Cost and
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Insurance paid to
Obligations of the buyer (importer)
• To pay for the merchandise
• Download in the port of destination *
• Import customs formalities
• Transportation in the country of destination
 CIP - Cost and
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Insurance paid to

CIP Package and

packaging
Load in
origin
Transportation Customs
in origin formalities
Handling at
origin
International Insurance
Transportation
Handling at Customs
destination formalities
Transportation Unload in
in destination destination
Delivery to
the buyer

Cost
Risk
 CFR - Cost and Freight
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the seller (exporter)

• Packing and packaging of the merchandise.
• To load the merchandise
• Transportation in the country of origin
• Export customs formalities
• Handling at origin
• International transportation
• Download in the port of destination *
 CFR - Cost and Freight
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Obligations of the buyer (importer)

• To pay for the merchandise
• Download in the port of destination *
• Insurance
• Import customs formalities
• Transportation in the country of destination
 CFR - Cost and Freight
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

CFR Package and

packaging
Load in
origin
Transportation Customs
in destination formalities
Handling at
origin
International Insurance
Transportation
Handling at Customs
destination formalities
Transportation Unload in
in destination destination
Delivery to
the buyer

Cost
Risk
 CIF – Cost, insurance and
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

freight
Obligations of the seller (exporter)
• Packing and packaging of the merchandise.
• To load the merchandise
• Transportation in the country of origin
• Export customs formalities
• Handling at origin
• Insurance ($M + 10%)
• International transportation
• Download in the port of destination *
 CIF – Cost, insurance and
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

freight
Obligations of the buyer (importer)
• To pay for the merchandise
• Download in the port of destination *
• Import customs formalities
• Transportation in the country of destination
 CIF – Cost, insurance and
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

freight

CIF Package and

packaging
Load in
origin
Transportation Customs
in origin formalities
Handling at
origin
International Insurance
Transportation
Handling at Customs
destination formalities
Transportation Unload in
in destination destination
Delivery to
the buyer

Cost
Risk
 DAP – Delivered at
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

place
Obligations of the seller (exporter)
• Packing and packaging of the merchandise.
• To load the merchandise
• Transportation in the country of origin
• Export customs formalities
• Handling at origin – To load it on the board
• International transportation
• Insurance
• Handling at destination
• Transportation in the country of destination*
 DAP – Delivered at
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

place
Obligations of the buyer (importer)
• To pay the merchandise
• Import customs formalities
• Unload at destination
 DAP – Delivered at
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

place

DAP Package and

packaging
Load in
origin
Transportation Customs
in origin formalities
Handling at
origin
International Insurance
Transportation
Handling at Customs
destination formalities
Transportation Unload in
in destination destination
Delivery to
the buyer

Cost
Risk
 DPU – Delivered at
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

place unloaded
Obligations of the seller (exporter)
• Packing and packaging of the merchandise.
• To load the merchandise
• Transportation in the country of origin
• Export customs formalities
• Handling at origin – To load it on the board
• International transportation
• Insurance
• Unload in the port of destination
• Transportation in the country of destination
• Unload at destination
 DPU – Delivered at
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

place unloaded
Obligations of the buyer (importer)
• To pay the merchandise
• Import customs formalities
 DPU – Delivered at
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

place unloaded

DPU Package and

packaging
Load in
origin
Transportation Customs
in import formalities
Handling at
origin
International Insurance
Transportation
Handling at Customs
destination formalities
Transportation Unload in
in destination destination
Delivery to
the buyer

Cost
Risk
 DDP – Delivered
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

duty paid
Obligations of the seller (exporter)
• Packing and packaging of the merchandise.
• To load the merchandise
• Transportation in the country of origin
• Export customs formalities
• Handling at origin – To load it on the board
• International transportation
• Insurance
• Download in the port of destination
• Transportation in the country of destination
• Unload at destination
• Import customs formalities
 DDP – Delivered
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

duty paid
Obligations of the buyer (importer)
• To pay the merchandise
 DDP – Delivered
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

duty paid

DPU Package and

packaging
Load in
origin
Transportation Customs
in origin formalities
Handling at
origin
International Insurance
Transportation
Handling at Customs
destination formalities
Transportation Unload in
in destination destination
Delivery to
the buyer

Cost
Risk
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Package and Load in Transportation Customs Handling at International Insurance Handling at Customs Transportation Unload in Delivery to
packaging origin in origin formalities origin Transportation destination formalities in destination destination the buyer
DDP DPU DAP CIP CPT FCA EXW

Cost
Risk
Cost
Risk
Cost
Risk
Cost
Risk
Cost
Risk
Cost
Risk
Cost
Risk
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Package and Load in Transportation Customs Handling at International Insurance Handling at Customs Transportation Unload in Delivery to
packaging origin in origin formalities origin Transportation destination formalities in destination destination the buyer

Cost
CIF CFR FOB FAS

Risk
Cost
Risk
Cost
Risk
Cost
Risk
 Criteria for selecting Incoterm
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

• Market of destination
• Experience and importance of the exporter company
• Experience and importance of the importer company
• Infrastructure: Transportations, equipment, port, access
• Container or not
• Political conditions at destination
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

CIF
FAS

CFR

DAP

DDP
DPU
FOB
EXW
Maritime
Equivalences

CIP
CPT
FCA

DAP

DDP
DPU
Any
EXW
Negocios Internacionales II. Prof. Juan Camilo Sánchez López. Unibagué. 2020

Activity