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What are INCO terms in global logistics?

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In global logistics, INCO terms are important standard contract terms that define the responsibilities of buyers and sellers for the delivery of goods. They are published by the International Chamber of Commerce (ICC) and are widely used in international trade.

The use of INCO terms in global logistics can help to ensure that transactions are conducted fairly and efficiently. They provide a common language for buyers and sellers to use when negotiating the delivery of goods. By using these terms, parties can avoid misunderstandings about who is responsible for what costs.

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There are 11 INCO terms divided into four categories: transportation, insurance, customs duties and taxes, and other costs.

Each category includes several specific terms that define the responsibilities of buyers and sellers.

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Transportation

Free onboard (FOB)

The seller is in control of delivering the goods to the buyer’s chosen port of departure. The buyer is responsible for transportation and insurance costs from this point.

Cost and freight (CFR)

The seller is in control of delivering the goods to the buyer’s chosen destination port. The buyer is responsible for transportation and insurance costs from this point.

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Cost, insurance and freight (CIF)

The seller is in control of delivering the goods to the buyer’s chosen destination port and providing insurance cover. The buyer is responsible for transportation costs from this point.

Delivered at a place (DAP)

The seller must dispatch the goods to the buyer at an agreed-upon location. The buyer is responsible for all transport and insurance costs.

Insurance

Free Alongside Ship (FAS)

The buyer is responsible for taking all risks associated with the loss or damage of goods from the time they are placed alongside the ship at the port of shipment.

Free On Board (FOB)

The seller is responsible for taking all risks associated with the loss or damage of goods from the time they are loaded onto the ship at the port of shipment.

Cost and Freight (CFR)

The seller is responsible for taking all risks associated with the loss or damage of the goods from the time they are loaded onto the ship at the port of shipment but is not responsible for paying any freight charges.

Customs duties and taxes

Ex Works (EXW)

The seller makes the goods available at their premises. The buyer is responsible for all other costs and risks involved in taking the goods from there to their destination.

Free Carrier (FCA)

The seller delivers the goods to a named place and is responsible for loading them onto the buyer’s carrier. The buyer is responsible for all other costs and risks involved in taking the goods from there to their destination.

Delivered At Terminal (DAT)

The seller must dispatch the goods to a terminal at the destination port and is responsible for unloading them. The buyer is responsible for all other costs and risks involved in taking the goods from there to their destination.

Delivered Duty Paid (DDP)

The seller delivers the goods to the buyer’s premises and is responsible for paying any customs duties or taxes. The buyer is not responsible for any costs or risks after the goods have been delivered.

Other costs

Cost, Insurance and Freight (CIF)

The seller oversees the delivery of the goods to the destination, arranging for insurance and paying customs duties and taxes.

Carriage Paid To (CPT)

The seller delivers the goods to a named place and is responsible for paying all transportation costs to that place. The buyer bears the risk of loss or damage in transit.

Carriage and insurance paid (CIP)

The seller manages the payment for the carriage and insurance of the goods to the named destination. The buyer bears the risk of loss or damage in transit.

In conclusion

A global logistics company will use one or more of these terms when shipping goods worldwide. The term used will depend on the specific arrangement made between the buyer and seller. The buyer and seller will also agree upon who is responsible for any other costs they may incur, such as customs duties and taxes. Knowing the different terms and what they mean is essential for anyone involved in global logistics.

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James Musoba
James Musoba
Studying Africa's startup and technology scene. I always look forward to discovering new exciting inventions and vibrant entrepreneurs.

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