About INCOTERMS

We can say "INCOTERMS classifies the responsiblity area between supplier & buyer."

 

Here are lots of conditions about Incoterms.

 

 

1. Group E : Cargo Delivery at Departure

     - EX Work : Buyer gets cargo at Factory

     -> Minimum Risk for Supplier

 

2. Group F : Main Carrage Unpaid 

     - FCA (Free Carrier to) : Buyer gets cargo at any place

     - FAS (Free Alongside Ship) : Buyer gets cargo before shipment

     - FOB (Free on Board) : Buyer gets cargo on board

     -> Buyer should arrange Vessel

 

3. Group C : Main Carrage Paid

     - CFR (Cost and Freight) : Buyer gets cargo after shipment

     - CIF (Cost, Insurance and Freight) : Buyer pays marine insurance & ocean freight

     - CPT (Carriage Paid to) : Buyer gets cargo at any place after paying freight

     - CIP (Carriage and Insurance Paid to) : Buyer gets cargo at any place after paying freight & insurance

     -> After shipment, Risk will be transferred to Buyer from Supplier

 

4. Group D : Cargo Delivery at Arrival

     - DAF (Delivered at Frontier) 

     - DES (Delivered Ex Ship)

     - DEQ (Delivered Ex Quay)

     - DDU (Delivered Duty Unpaid)

     - DDP (Delivered Duty Paid)

     -> All risk of delivery should be taken by Supplier

 

 

For Risk Avoider, Group E contract is the best for Supplier. But no customer want to buy with EX-work condition. Risk is producing margin. So Suppliers have to study Risk Factor for all routes to the arrival. Then They can get appropriate margin with the management of Risk.