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Incoterms or international commerce terms is a series of international sales terms that is widely used throughout the world. Incoterms 2000 provides a set of international rules, published by the International Chamber of Commerce (ICC) effective 1 January 2000, for the interpretation of the most commonly used trade terms.It divides transaction costs and responsibilities between buyer and seller, reflects state of the art transportation practices and closely corresponds to the U.N. Convention on Contracts for the International Sale of Goods. Incoterms deal with the questions related to the delivery of the products from the seller to the buyer. This includes the carriage of products, export and import clearance responsibilities, who pays for what, and who has risk for the condition of the products at different locations within the transport process.
Ex works (EXW)
It means that the seller has the goods ready for collection at his premises (factory, warehouse, plant) on the date agreed upon. The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination.
Free carrier (FCA)
It can be used for all modes of transportation including multimodal transport. The seller delivers the goods into the custody of the first carrier, and this is where the passing of risk occurs. The buyer pays for the transportation.
Free Alongside Ship (FAS)
It means that the seller pays for transportation of the goods to the port of shipment. The buyer pays loading costs, freight, insurance, unloading costs and transportation from the port of destination to his factory. The passing of risk occurs when the goods have been delivered to the quay at the port of shipment.
Free on Board (FOB)
It is similar to FAS, but the seller also pays for the loading costs.The goods are placed on board the ship by the seller at a port of shipment named in the sales agreement. The risk of loss of or damage to the goods is transferred to the buyer when the goods pass the ship's rail (i.e., off the dock and placed on the ship).
Cost and Freight (CFR)
It means that the seller pays for transportation to the port of shipment, loading and freight. The buyer pays for the insurance and transportation of the goods from the port of destination to his factory. The passing of risk occurs when the goods pass the ship's rail at the port of shipment.
Cost, Insurance and Freight
(CIF It is a common term in a sales contract that may be encountered in international trading when ocean transport is used. When a price is quoted CIF, it means that the selling price includes the cost of the goods, the freight or transport costs and also the cost of marine insurance.CIF is identical in most particulars with Cost and Freight (CFR), and the same comments apply, including its applicability only to conventional maritime transport. In addition to the CFR responsibilities, the seller under CIF must obtain in transferable form a marine insurance policy to cover the risks of transit with insurers of repute. The policy must cover the CIF price plus 10 per cent and where possible be in the currency of the contract. Note that only very basic cover is required equivalent to the Institute "C" clauses, and buyers should normally insist on an "all-risk" type of policy such as that under the Institute "A" clauses. The seller's responsibility for the goods ends when the goods have been delivered to the marine carrier or have been delivered on board the shipping vessel, depending upon the terms of the contract.This term is only appropriate for conventional maritime transport, not ro/ro or international container movements.
Carriage Paid To (CPT)
It can be used for all modes of transport including multimodal transport. The seller pays for the freight to the named point of destination. The buyer pays for the insurance. The passing of risk occurs when the goods have been delivered into the custody of the first carrier.
Carriage and Insurance Paid to (CIP)
It can be used for all modes of transport including multimodal transport. The passing of risk occurs when the goods have been delivered into the custody of the carrier. It is the same as CPT except that the seller also pays for the insurance.
D - TERMS
Delivered At Frontier (DAF)
It can be used when the goods are transported by rail and road. The seller pays for transportation to the named place of delivery at the frontier. The buyer arranges for customs clearance and pays for transportation from the frontier to his factory. The passing of risk occurs at the frontier.
Delivered Ex Ship (DES)
It means that the seller has to pay for the same as in CIF, but the passing of risk does not occur until the ship has arrived at the port of destination, but before the goods have been unloaded.
Delivered Ex Quay (DEQ)
It means the same as DES, but the passing of risk does not occur until the goods have been unloaded at the port of destination.
Delivered Duty Unpaid (DDU)
It means that the seller pays for all transportation costs and bears all risk until the goods have been delivered, but does not pay for the duty.
Delivered Duty Paid (DDP)
It means that the seller pays for all transportation costs and bears all risk until the goods have been delivered and pays the duty.
DANGEROUS GOODS CLASSIFICATION
DG sticker symbol
Class 1 : Explosives
Explosives with a mass explosion hazard example TNT, dynamite, nitroglycerine.
Explosives with a severe projection hazard.
Explosives with a fire, blast or projection hazard but not a mass explosion hazard.
Minor fire or projection hazard (includes ammunition and most consumer fireworks).
Extremely insensitive articles.
Class 2 : Gases
Flammable gas – gases which ignite on contact with an ignition source example acetylene, hydrogen.
Non flammable gases – gases which are neither flammable nor poisonous example oxygen, nitrogen, neon.
Poisonous gases – gases liable to cause death or serious injury to human health if inhaled example fluorine, chlorine, hydrogen cyanide.
Class 3 : Flammable liquids
Highly flammable liquids with a boiling point below 35 degree Celsius example diethyl ether, carbon disulfide.
Flammable liquids with a flashpoint of less than 23 degree Celsius and boiling point above 35 degree Celsius example petrol, acetone.
Liquids with a flashpoint above 23 degree Celsius but not exceeding 61 degree Celsius and a boiling point greater than 35 degree Celsius example kerosene.
Class 4 : Flammable solids
Flammable solids which are easily ignited and readily combustible example nitrocellulose, magnesium, safety or strike-anywhere matches.
Spontaneously combustible substances example aluminium alkyls, white phosphorus.
Substances which emit a flammable gas when wet or react violently with water example sodium, calcium, potassium .
Class 5 : Oxidizing agents and organic peroxides
Oxidising agents other than organic peroxides example calcium hypochlorite, ammonium nitrate , hydrogen peroxide.
Organic peroxides ,either in liquid or solid form example benzoyl peroxides, cumene hydroperoxide.
Class 6 : Poisonous toxic and infectious substances
Poisonous substances which are liable to cause death or serious injury to human health if inhaled, swallowed or by skin absorption example potassium cyanide, mercuric chloride, hydrofluoric acid.
Biohazardous substances example virus cultures, pathology specimens, used intravenous needles.
Class 7 : Radioactive substances
Radioactive substances comprise substances or a combination of substances which emit ionizing radiation example uranium, plutonium.
Class 8 : Corrosive substances
Acids example sulfuric acid, hydrochloric acid .
Alkalis example potassium hydroxide sodium hydroxide.
Class 9 : Miscellaneous dangerous substances
Hazardous substances that do not fall into the other categories example asbestos, air-bag inflators, self inflating life rafts, dry ice.