Collaborate on Billing Terms and Conditions Template for Logistics with Ease Using airSlate SignNow

Billing terms and conditions template for Logistics

hi in this video we'll take a look at incoterms 2020 what they mean their application and the benefits of using them so make sure to watch the full video if you're new exporters we've got a lot to cover in today's video so let's get started so what are encode terms and who made them incoterms are referred to as international commercial terms incoterms defines the risk and responsibility of a shipment between the buyer and the seller incoterms were developed by the international chambers of commerce so why do we use incoterms incoterms holds a universal meaning around the world people use incoterms to avoid misunderstandings in foreign trade contracts by clarifying the tasks costs and risks how to use incoterms if parties want incoterm 2020 rules to apply to their contract the safest way is to clearly mention it in the contract for example cif hong kong incoterms 2020 icc group the incoterms 2020 into two categories number one rules for any modes of transport and number two rules for c and inland waterways transport in the first group we have seven terms we have created an easy to understand chart that displays input terms 2020. the left side of the chart displays the different types of incoterms beginning from top to bottom the top side of the chart displays the different obligations and charges and displays which are covered by the seller and which are covered by the buyer the blue points to the sellers and the yellow points the buyer so let's start at the first encode term e-x-w which means x-works or x-warehouse in x-works the seller is only responsible for ensuring that the cargo is packaged so it is ready for export and the goods can be collected from their location the risk or liability for the goods transfers to the buyer when the goods are made available at the agreed-upon place the buyer bears all risks and costs once they collect the goods from the seller's location by applying this rule the buyer and the seller do not have to make an insurance contract now it's time for inco term number two fca which means free carrier in fca the seller is responsible for the export clearance and the delivery of goods to the carrier at the named place of delivery the inco terms 2020 fca has two possible delivery locations number one if the place of delivery is at the seller's premises the seller must load the goods number two if the delivery takes place in a different location the seller is not responsible for unloading when the goods have been delivered by the seller to the selected location the risk transfers to the buyer the buyer is responsible for paying the price of goods and all that transportation fees from the seller's place to the buyer's selected place in fca it becomes the buyers responsibility to determine if they would like to obtain an insurance policy moving right along to incoterm number three cpt cpt also known as carriage paid in a cpt incoterm the seller is responsible for clearing the goods for export and delivering the goods to the name place of destination with the transportation fees the risk is transferred from the seller to the buyer as soon as the goods are delivered to the first carrier even if there are multiple transportations the buyer is only responsible for import requirements and local delivery and unloading charges the seller is not responsible for any damages if the buyer has not insured the products because the goods have already been transferred to the first carrier without further ado let's start things off with incoterm number four cip the cip stands for carriage and insurance paid too in cip the seller is responsible for delivering the goods to the destination the cost of international freight as well as insurance fees and charges cip is also very similar to cpt except that with cip the seller is also responsible for arranging main carriage insurance and let's dive right into encode term number five dap the dap means delivered at place under the dap the seller is responsible for all costs and risks associated with the delivery of the goods to the final destination usually the buyer's premises the risk transfers from seller to buyer when the goods are available for unloading the buyer is then responsible for unloading the goods at the end destination in dap both parties are not obligated to make a contract of insurance but it is recommended with that it's time for our sixth incoterm dpu dpu stands for delivered at place unloaded in dpu the seller is responsible for all costs and risks until the goods are delivered to named destination place which is usually close to the buyer dpu is the only incoterms rule that requires the seller to unload goods at the place of destination the risk transfers from seller to buyer at the place of unloading the buyer is responsible for import clearance procedures and both parties are not obligated to obtain an insurance policy but it is recommended moving right along to incoterm number 7 ddp which means delivery duty paid as per the shipping terms under ddp the seller bears all costs and risks involved in delivering the goods to the selected place it is also the only term where the seller is liable for import custom fees the risk transfers from the seller to buyer at the place of unloading the buyer is then responsible for unloading the goods at the end destination there is no obligation to insure the goods the seller is not obligated to ensure the goods for pre-carriage or main carriage with that we have completed our first category of incoterms and now it's time for category two rules for sea and inland waterways transport our first incoterm is fas fas stands for free alongside ship in fas the seller is liable and responsible for all the procedures in their country up until the goods are alongside the ship or the terminal warehouse fas indicates that the risk transfers to the buyer when the goods are placed alongside the ship the buyer is responsible for loading the freight onto the vessel as well as handling local carriage discharge import formalities and duties and onward carriage to the final destination insurance is not a stipulated requirement under fas however it is a common practice for both buyer and seller to get insurance coverage of the cargo's journey they are each responsible for now it's time for ingo term number two fob fob is also known as free onboard in fob the seller clears the goods for export and ensures that they are delivered to and loaded onto the vessel for transport at the named port of departure the risk transfers from the seller to the buyer when the goods are onboard the vessel and the buyer bears costs from that point forward the buyer arranges all the other stages to the cargo's ultimate destination insurance coverage isn't mandatory under the fob inco term however it is common practice to obtain insurance this may be done by the buyer seller or both to cover the entire ocean freight journey or their respective responsibilities with that it's time for our third incoterm cfr stands for cost and freight the cfr incoterm is an incoterm that is exclusive to ocean freight shipping in cfr the seller is not only responsible for delivering the goods to the ports specified by the buyer but also bears the transportation costs of the goods to the destination port the risk passes from seller to buyer when the seller delivers the goods on board the ship the buyer is responsible for paying all the additional transport fees from the port of destination including import clearance and duties the seller is not responsible for procuring marine insurance against the risk of loss or damage to the cargo during transit and now it's time for our last inco term cif that stands for cost insurance and freight agreement with the seller holding responsible for all three 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 the risk is transferred to the buyer at the time the goods are on board the buyer assumes all risks once the goods are on board the vessel for the main carriage however they don't take on any costs until the freight arrives at the named port of destination in cif the seller is obligated to take out the minimum level of insurance coverage for the buyer's risk we have completed all lincoln terms now you can decide which one is the best for you i get a lot of questions from the new exporters like for example which incoterm is the best for new exporters well there is no best incoterm it all depends on the requirements of the buyer and the seller in my opinion these are some of the best incoterms for new exporters fob cfr and fca if you learned something new from today's video make sure to subscribe to our youtube channel right now just click on the button below this video and if you want exclusive import export training that i only share with subscribers head over to usa usaxim club.com that is usa eximclub.com and sign up for our newsletter it's free now i want to turn it over to you which and go term from this video are you going to use let me know by leaving a comment below right now thanks and good day you