Countries in the world have differentiated from each other in terms of language, culture and religion over time as a result of geographical distances and limited transportation facilities. In the field of trade, the situation has not followed a different path than this, but with the widespread use of the internet today, Trade Atlas categorizes millions of intelligence data collected from all over the world and presents them to users which in a way facilitates trade activities. For this reason, it is aimed that some trade concepts have an international standard in order to facilitate commercial transactions. A step in this direction was taken for the first time in 1936 and INCOTERMS was published by the International Chamber of Commerce (ICC). INCOTERMS has been updated in 1963, 1967, 1976, 1980, 1990 and 2000, 2010 and 2020 and today INCOTERMS 2020 is valid.
What is the meaning of INCOTERMS?
INCOTERMS are the delivery methods determined by the International Chamber of Commerce. INCOTERMS are only the rules regarding the delivery method, for example, it does not determine the payment method. It does not completely regulate the relationship between the importer and the exporter. INCOTERMS are codes that regulate the obligations to deliver and receive goods, the sharing of costs in transportation, the moment of transition of damage and benefit, and whether there is an obligation to take out insurance. In international trade, importers and exporters determine the details of the delivery type by referring to one of the delivery methods defined by INCOTERMS. These details include who will pay the shipping and insurance costs, when the benefits and damage will pass to the importer, where the goods will be delivered, etc. contains information. In this way, conflicts that may occur during the commercial activity process are prevented. Delivery forms in INCOTERMS are the following:
Delivery Methods Used for All Transport Types
EXW - Ex Works: All costs and risks are borne by the importer. The delivery of the goods is made to a point determined by the exporter.
FCA - Free Carrier: In this type of trade, export formalities and domestic shipping costs up to the specified location belong to the seller. The buyer is responsible for shipping after the designated location and import formalities in the receiving country.
CPT - Carriage Paid To: It means that the seller pays the freight for the goods to be transported to the agreed destination. When an unexpected situation happens to the goods, the buyer pays the damage because the goods are in the custody of the carrier.
CIP - Carriage and Insurance Paid To: Delivery with transportation cost and insurance paid. In addition to the CPT, the exporter is obliged to take out transport insurance.
DAP - Delivered at Place: It means delivery at the designated place. The product is delivered in the importer's country and to the designated address, with all costs paid, except taxes.
DPU - Delivered At Place Unloaded: It is the delivery of the goods to the buyer after the unloading costs are paid by the seller at the terminal point determined by the buyer and the seller.
DDP - Delivered Duty Paid: It means delivery with customs duties paid. Almost all costs are borne by the exporter. All expenses, including customs clearance in the importing country, up to delivery to the importer are covered by the exporter.
Delivery Methods Used in Sea and Inland Waters
FAS - Free Alongside Ship: FAS delivery method is used only for maritime transportation. It is the delivery of the goods at the dock or at the loading area.
FOB - Free on Board: It means delivery to the ship's bar. After the goods are loaded on the ship, responsibilities such as transportation, insurance and cost pass to the importer.
CFR - Cost and Freight: It means delivery with freight paid. In this delivery method, freight is paid by the exporter and all remaining costs are paid by the importer.
CIF - Cost, Insurance and Freight: Costs, freight and insurance paid delivery. It is the delivery of the goods in the importer's country with all costs covered.
Changes Made with INCOTERM 2020
DAT - Delivered At Terminal delivery type has been changed to DPU - Delivered At Place Unloaded. DAT does not differ from DPU in terms of content. The seller has the condition that the goods are unloaded from the transport vehicle at the buyer's order without customs clearance.
These delivery methods described by INCOTERMS provide great convenience to exporters and importers in the international arena. Thanks to these delivery methods, standardization has been achieved in the field of trade and the solution of possible problems has been facilitated.
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