Incoterms 2020 defines 11 rules, the same number as defined by incoterms 2010. The seller must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage. Green indicates the seller has the responsibility to provide the service blue indicates it is the buyers responsibility exwincoterms fas fca fob cfr cif cpt cip dat dap ddp load to. Now i can specify the differences between cif incoterms and cip incoterms in regards to incoterms 2010 rules. Below is a summary of the most commonly used 2000 and 2010 incoterms. Cip incoterms can be used with any mode of transport including sea, land, air, rail and multimodal transportation. Apart from the fob rule, the most frequently used in bulk cargo transport by sea is the cif rule. Created using powtoon free sign up at youtube create animated videos and animated presentations for free. What is the cif incoterm cost, insurance, and freight incoterms 2010 dictates that the cif incoterm, or cost, insurance and freight, is exclusive to maritime shipping. Transport expenses are thus the responsibility of the exporter.
One rule of the 2010 version delivered at terminal. The use of cif incoterms in indonesias import declarations budi nugroho abstract the world trade organization wto general agreement on tariffs and trade gatt 1994 wto valuation agreement and the international chamber of commerces icc international commercial terms incoterms are two quite separate instruments. In practice it should be used for situations where the seller has direct access to the vessel for loading, e. The incoterms faqs about the basics why incoterms. Incoterms explained international commercial terms incoterms or international commercial terms first created in 1936 by the international chamber of commerce, incoterms are uniform, internationally recognized foreign trade terms that refer to the type of agreement for the purchase and shipping of goods internationally. Cif terms are the most common for insured shipments. Incoterms explained definitions and practical examples fbabee. Cost insurance and freight cif use of this rule is restricted to goods transported by sea or inland waterway.
Cost, insurance and freight named port of destination click to enlarge in cost, insurance and freight, the seller is responsible for delivering the goods onboard the vessel at the port of shipment not port of destination. For confirmation on the applicability of any incoterm, please refer to your local magellan representative. A guide to incoterms terms of sale a merchants requirements for marine insurance are determined by the terms of sale heshe negotiates with the. Incoterms 2010 icc international chamber of commerce. Where is the named place for handing over responsibility from the seller to the buyer. Incoterms 2020 cip new incoterms rules transport shiphub. Cif cost, insurance and freight in addition to its obligations and risks for fob, the seller contracts and pays freight, costs and insurance related to the transportation of the goods to the combined port of destination. Seller also arranges and pays for insurance for the goods for carriage to the named port. The icc has launched the incoterms 2020, which is effective from the 1st of january 2020. The security requirements in relation to transportationrelated issues are covered in incoterms 2020. Cif cost, insurance and freight cost, insurance and freight means that the seller delivers the goods on board the vessel or procures the goods already so delivered. Cost, insurance and freight cif means the seller pays costs, freight and insurance against the buyers risk of loss or damage in transit to destination. Under cif incoterms, the seller delivers goods onboard the vessel at the port of shipment, pays for transport and minimum insurance coverage.
Incoterms cif is short for cost, insurance and freight. Also, unlike the cfr rule, in the cip rule, the seller is responsible for concluding the contract and paying the cost of insuring the goods to the buyer. Note that this insurance covers the buyers risk, because risk will pass from the seller to the buyer before the main carriage. Incoterms 2015 exw ex works the seller makes the goods available to be collected at their premises and the buyer is responsible for all other risks, transportation costs, taxes and duties from that point onwards.
Cif cost, insurance, and freight is a tricky incoterm. Incoterms are international rules that are accepted by governments, legal authorities and practitioners worldwide for the interpretation of the most commonly used terms in international trade. For the specific import and shipping from china, it means china suppliers sellers or middle man overseas importers as shipper provide door to port service from china suppliers to destination ports. Dat was removed, and is replaced by a new rule delivered at place unloaded. They have been incorporated in contracts for the sale of goods worldwide and provide rules and guidance to importers, exporters, lawyers, transporters, insurers and students of international trade.
Luckily, as of 1936, incoterms are widely recognized, and businesses frequently use them to determine the liability and accountability. It is essential that you are aware of your terms of trade prior to shipment. It is one of the most used incoterms among international trade and shipping. What are the differences between cif and cip incoterms. The term is used to explain which party is responsible for the costs and risks at each stage of the goods movement, according to tates export guide.
They either reduce or remove altogether uncertainties arising from differing. Incoterms 2015 international commercial terms which are pre made by the international chamber of commerce and are acceptable as incoterms worldwide by every government. They provide the parameters of responsibilities between seller and buyer. Cost insurance and freight cif is quite similar to cfr but only with a slight difference. List of incoterms international commercial terms cfr cost and freight the exporter must deliver the goods at the port of destination selected by the importer. The incoterms rules were amended with the eighth version incoterms 2010 having been published on january 1, 2011. Incoterms international commercial terms the international chamber of commerce first published in 1936 a set of international rules for the interpretation of trade terms. The incoterms rules 2010 international chamber of commerce. Sep 14, 2017 the incoterms rules were amended with the eighth version incoterms 2010 having been published on january 1, 2011. The use of cif incoterms in indonesias import declarations. Jan 24, 2018 defining international sales contracts requires you to have a bit more knowledge about specific export and import terms.
Reference material can be purchased for the international chamber of commerces website. Buyer buys 21,000 kgs of extra virgin olive oil from a. They are intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries. The icc is responsible for the interpretation of the delivery terms used in foreign trade contracts between seller and buyer. Incoterms 2020 is the ninth set of international contract terms published by the international chamber of commerce, with the first set having been published in 1936. Under cif, the seller is responsible for the cost and freight of bringing the goods to the port of destination specified by the buyer. Just paying for the goods is not the end of the buyers or the sellers responsibility. Incoterms citt webinar series 71 first published in 1952, the ucc is a code or a collection of statutes. In cif terms, the seller clears the goods at origin places the cargo on board and pays for insurance until the port of discharge at the minimum coverage. Exw ex works the seller makes the goods available to be collected at their premises and the buyer is responsible for all other risks, transportation costs, taxes and duties from that point onwards. In the cip rule, the goods are transferred when they are delivered to the first carrier, while in the cif rule when the goods are loaded on a mean of transport.
Jun 16, 2015 incoterms 2010 international trade import export business supply chain logistics documents duration. Here are main features of the incoterms 2010 rules. International commercial terms incoterms define the mutual obligations of seller and buyer arising from the movement of goods under an international contract from the standpoint of risks, costs and documents unctad, 1990. Therefore the level of cover may need to be addressed elsewhere in the commercial agreement. Incoterms 2020 cif incoterms 2020 rules cif shiphub. Cost, insurance, and freight cif is a method of exporting goods where the seller pays expenses until the product is completely loaded onboard ship. Under cfr incoterms, the seller clears goods for export, delivers them onboard the ship at the port of departure, and pays for transport to the named port of destination. Incoterms are a set of threeletter standard trade terms most commonly used in international contracts for the sale of goods. This happens as soon as the shipment gets loaded on to the carrier. The incoterms rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. It is important, however, to clearly specify which version you have chosen. The newest edition of incoterms is incoterms2015 which is an eighth edition. Note that this insurance covers the buyers risk, because risk.
International commercial terms incoterms the incoterms international commercial terms is a universally recognized set of definitions of international trade terms, such as fob, cfr and cif, developed by the international chamber of commerce icc in paris, france. Cif rules are used only in maritime or inland waterway transport. The incoterms rules have become an essential part of the daily language of trade. The importer bears the expenses of insurance and unloading of the goods. However as with carriage and insurance paid to, the rule only require a minimum level of cover, which may be commercially unrealistic. Incoterms or trade terms are used to define the obligations of seller and buyer in the movement of goods from one person to another. The icc have begun consultations on a new revision of incoterms, to be called.
It is an expense paid by a seller shipper to cover the. The new incoterms point out risks exist when a buyer or seller becomes the importer or exporter of record in a foreign country. Carriage insurance paid to delivered at place delivered at terminal delivered duty paid. This chart is designed to provide a basic level of understanding of incoterms rules and definitions, and is a general guide only. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The difference between the incoterms 2000 and the 2010 version was the reduction in the numbers of incoterms from to 11. Cif incoterms can only be used with porttoport sea transportation.
The risk is passed on by the buyer from the seller. Also opportunities to insure imports, exworks, fobfas portion of transit, warehouse storage, etc. In that, in cif there happens to be an addition of the insurance. Cfr cost and freight cif cost, insurance and freight. Under cfr incoterms, the seller clears goods for export, delivers them onboard the ship at the port of departure, and. Below are short descriptions of the 11 rules from the. However, it is not allowed to use cif incoterms using more than one mode of transportation. Four incoterms daf, des, deq, ddu have been replaced by two new incoterms dat, dap. Od verze z roku 2010 obsahuji incoterms 11 dolozek. A summary of the main difference between the 2000 and 2010 incoterms is given here. Cif cost, insurance and freight paid to port of destination incoterms 2020 explained. They are incorporated in contracts for the delivery of goods worldwide and provide guidance to importers, exporters, lawyers, transporters, insurers and students of international trade.