Incoterms
Incoterms (an abbreviation for International Commercial Terms) are a set of rules published by the International Chamber of Commerce (ICC) that are widely used in International commercial transactions or procurement processes. Hatched out since 1936 to reduce misanderstanding among traders and minimize trade disputes arising from different interpretation of the rules in different countries , Incoterms define the responsibilities of sellers and buyers for the delivery of goods under sales contracts for domestic and International trade.
The latest version of Incoterms, Incoterms 2010, was launched in September 2010 and became effective in January 1, 2011. Incoterms 2010 have been developed as a result of an extensive review of current shipping practices and trends in an effort to keep up the rapid expansion of world trade.
The update of Incoterms has required a division of them in two main categories, based only on method of delivery.
One group concerns those terms employed in any mode of transport ( EXW- Ex Works; FCA- Free Carrier; CPT- Carriage Paid To; CIP- Carriage and Insurance Paid to; DAT- Delivered at Terminal; DAP- Delivered at Place; DDP- Delivered Duty Paid), whereas the other group includes Incoterms applied solely to sale that involve transportation over water ( FAS- Free Alongside Ship; FOB- Free on Board; CFR- Cost and Freight; CIF- Cost, Insurance and Freight).
As you can see in the table, every single abbreviation sets clearly which part involved in the transport is obliged to take on responsibility for customs costs and insurance values.
