| Trade with Confidence - use an international language |
| There's a language used in the international trade of goods to make it clear for both the buyer and the seller who will be responsible for what part of the movement of cargo and the costs. This language is known as "Incoterms". |
| When goods traveling overseas are priced, it's important to know what the price quoted includes or excludes when it comes to freighting and Incoterms are used to communicate this at a glance. Learning and using this language wherever price is discussed is worthwhile to keep your margins safe and make trading with you simple and easily understood. |
| Here's a very basic example of an Incoterm in use: NZ$5,000 EXW Sydenham, Christchurch. To avoid any possible confusion, the Incoterm (EXW) used here also names the place or location to make its price intention crystal clear. In this situation the use of this Incoterm means (Ex Works) that the $5,000 price tag for the goods is in New Zealand currency and excludes all costs for transport from the Seller's location at Sydenham in Christchurch to wherever the buyer wants the goods. It also means that technically, the Buyer is responsible for the goods from this named location. The buyer should arrange their own freighting and attach cargo insurance to the goods from this point. |
| Some commonly used Incoterms follow... |
| EXW |
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EX WORKS (... name location) |
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| Buyer's responsibility attaches at Sellers named location. Excludes inland costs to export depot or wharf, freight, insurance, import customs clearance, local delivery and port charges. |
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| FOB |
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FREE ON BOARD (... name port of shipment) |
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| Buyers' responsibility attaches at the named export depot or wharf. Excludes freight, insurance, import customs clearance, local delivery and port charges. |
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| CFR |
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COST AND FREIGHT (... name place of destination) |
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| Buyers' responsibility attaches at the named place of arrival (depot, port or airport). Excludes insurance, import customs clearance, local delivery and port charges |
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| CIF |
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COST, INSURANCE AND FREIGHT (... name port of destination) |
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| Buyers' responsibility attaches at the named place of arrival (depot, port or airport). Excludes import customs clearance, local delivery and port charges. |
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| FIS |
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FREE INTO STORE (... name place of destination) |
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| Responsibility attaches at Buyers' own door as named. Includes all costs to importers' premises. |
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| FCA |
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FREE CARRIER (... name place) |
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| FAS |
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FREE ALONG SHIP (... name port of shipment) |
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| CPT |
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CARRIAGE PAID TO (... name place of destination) |
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| CIP |
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CARRIAGE AND INSURANCE PAID TO (... name place of destination) |
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| DAF |
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DELIVERED AT FRONTIER (... name place) |
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| DES |
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DELIVERED EX SHIP (... name port of destination) |
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| DDU |
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DELIVERED DUTY UNPAID (... name place of destination) |
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| Version of FIS where Buyer/Importer pays own dues to local Customs Department. |
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| DDP |
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DELIVERED DUTY PAID (... name place of destination) |
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| Version of FIS where Seller pays dues to Buyers'/Importers' Customs Department. |
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