Read about INCO terms in "Import Transactions & Customs Compliance", pgs. 3 – 16. Outside resources can be utilized. Incoterm Groups
Incoterm
Description
Group E / Departure
ExW
Ex Works (… named place)
Group F / Main carriage unpaid
FCA
Free Carrier (… named place)
FAS**
Free Alongside Ship (… named port of shipment)
FOB**
Free on Board (… named port of shipment)
Group C / Main carriage paid
CFR**
Cost and Freight (… named port of destination)
CIF**
Cost, Insurance, and Freight (… named port of destination)
CPT
Carriage Paid to (… named place of destination)
CIP
Carriage and Insurance Paid to (named place of destination)
Group D / Arrival
DAT
Delivered at terminal (…named terminal at destination)
DAP
Delivered at place (…named place of destination)
DDP
Delivered Duty Paid (… named place of destination)
**To be only used with non-containerized freight and waterway/ocean shipments
For each of the following scenarios, identify which Incoterm would be most appropriate:
1. A U. S. seller has agreed to ship non-container goods loaded onto the "President Ocean Freighter" ship at Long Beach, CA.
Incoterm:
2. A Brazilian company has agreed to send samples by air to a buyer in Chicago, IL. The seller is to pay for freight, to clear U. S. customs, and pay for any applicable U. S. import tariff.
Incoterm:
3. A U. S. seller has agreed to ship a container by ocean to Hong Kong and pay for the freight, and insurance. Buyer is to clear the products through Hong Kong customs and pay all import charges.
Incoterm:
4. A large Chilean company wants to buy a pallet of goods from a U. S. seller and will pay all freight and insurance from the seller’s U. S. manufacturing location in Atlanta, GA. The seller will clear the goods for export.
Incoterm:
5. Assume ABC Air Filters is based in Denver, CO. It regularly exports shipments of air filters to China Air Filters, a large buyer in Suzhou, China. The closest ocean port to Denver is Tacoma, WA and the closest ocean port to China Air Filters is Shanghai, China. ABC Air Filters is shipping a special piece of machinery to China Air Filters. The machinery is too large to fit into a container. ABC Air Filters has agreed to pay for the freight and insurance to Shanghai, but not clear the good through customs.
Incoterm: