INCOTERMS Presentation

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    INCOTERMS

    Presenter: Romana NargusClass Roll No: A-1

    Exam Roll No: 462

    MBA (Banking & Finance)

    Session2009-2011

    Presented ToProf: Dr Khair-uz-Zaman

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    Incoterm is formed from phrase i-e internationalcommercial term.

    Incoterms are a set of international rules forinterpretation of trade terms developed by theICC for the ist time in 1936.

    OBJECTIVE:In order to remove the source of friction ininternational trade leading to disputes.

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    Incoterms has been revised and updated to keep pacewith changing trend in IT.

    The 1980 version catered for the revolutionarychanges in the transportation industry brought aboutby containerization.

    It covered transportation from exporters warehouseto importers warehouse through the term knownmulti-modal transport.

    The 1990 version recognizes the increasing use of

    electronic data interchange and amended the MMT toFCA (free carrier named place),

    CPT (carriage paid named place and destination)

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    CIP (carriage and insurance paid to named place

    and destination) .

    In international trade transactions, goods

    movement would be:

    1. From sellers place to international

    transporters place, e.g Peshwar to Karachi.

    2. From sellers transporters place to buyers

    transporters place karachi port to Hull port.3. From port to buyers place of business.

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    Any international trade transaction will involve:

    Arrangement and payment of goods from theplace of seller to the place of buyer.

    Coverage of risk if the transaction is notcarried out as per agreed terms.

    Compensation for the loss of or damage to the

    goods during transit.

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    There are 13 :

    1. Ex-Works (EXW): Sellers responsibility isto deliver the goods at his own premises. Theseller is not responsible for loading the

    goods on vehicles brought in by the buyer.

    2. FCA: Free Carrier (named place): Delivery ofgoods at a named place, container terminal. Thesellers obligation is to bear all risks and costsuntil the goods are delivered into the custody ofthe carrier named by the buyer at the named

    place or point.

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    3. FAS (Free Alongside Ship-named port): the

    sellers obligation is to bear all risks and costsuntil the goods have been placed alongside the

    ship on the quay at the named port of shipment.

    Karachi sea port provide Dock Receipt.

    4. FOB (Free On Board): goods to cross ships

    rail and be loaded on board a named ship. The

    seller obligation is to bear all risks and cost until

    the goods are loaded on board a ship named in

    the contract

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    5. Cost & Freight (c & f):

    The sellers obligation is to bear all risks andcosts including freight to bring the goods to the

    named destination until the goods pass the

    ships rail in the port of shipment. The sellerwill complete export customs formalities,

    payment of duties, freight and loading.

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    6. (CIF Cost, Insurance & Freight):

    The sellers obligation is to supply goods andcommercial invoice, carriage of goods to the

    named port of destination, procure at his own

    expenses and in a transferable form, a policy ofcargo insurance and bear all risks of loss of or

    damage to the goods until such time as they

    have passed the ships rail at the port of

    shipment.

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    7. CPT (Carriage To Paid named place of

    destination):

    The sellers obligation is to pay the freight forthe carriage of goods to the named destination

    and bear the risk until the goods are delivered

    into the custody of the carrier.

    8. CIP (Carriage & Insurance Paid to the named

    place and destination):

    CPT + to procure cargo insurance against the

    risk of loss of or damage to the goods during the

    carriage. i=invoice value +10%

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    9. DAF (Delivered At Frontier named place):

    The sellers obligation is until the time the

    goods have been made available and cleared foeexport at the named point at the frontier. This

    term is used when a land route is used for

    transport of goods.

    10. DES (Delivered Ex-Ship named port of

    destination):

    Similar to CIF except that the sellers obligation

    is make the goods available to the buyer on

    board the ship.

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    11. DEQ (Delivered Ex-goods Quay fully paid

    named port of destination):

    The sellers obligation is to make the goodsavailable to the buyer on the quay at the port of

    destination named in the contract of sale. The

    seller has to pay unloading charges, completeimport formalities and pay taxes and duties.

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    12. DDU (Delivered Duty Unpaid named place

    of destination):

    Under this term the sellers obligation is todeliver the goods at the named place in the

    country of buyer. The seller has to bear all risks

    and expenses for completing customsformalities etc but not the duty and taxes. All

    costs risk to be borne upto that place. The taxes

    are to be paid by importer but import formalities

    are to be completed by the exporter.

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    13. DDP (Delivered Duty Paid):

    In this term the sellers obligation is to deliver

    the goods at the named place in the country ofthe buyer. The seller has to bear all risks and

    expenses including duties, taxes and clearance

    costs.

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    Thank you for your kindAttention !