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Incoterm DAP – Delivered At Place in details

The DAP Incoterm is a multimodal Incoterm. The multimodal Incoterms are Incoterms covering several means of transport, unlike the maritime Incoterms. It joins the 6 other multimodal Incoterm: EXW – Ex Work , FCA – Free Carrier, CPT – Carriage Paid To, CIP – Carriage Insurance Paid to, DAP – Delivered At Place, DPU – Delivered At Place Unloaded, DPP – Delivered Duty Paid.

What is the Incoterm Delivered At Place?

The Incoterm DAP means “Delivered at Place of Destination”. The seller is responsible for delivering the goods to the place of delivery. The risks and costs related to the transport are the responsibility of the seller. This is one of the Incoterms which most covers buyers in the case of an international transaction.

The transfer of responsibility will take place when the goods are made available to the buyer without being unloaded in the destination country.

The obligations of the seller and the buyer with the DAP Incoterm?

Obligations of the seller :

  • To prepare and load the goods from the warehouse to the departure terminal.
  • To route the goods to the main means of transport.
  • To pay the costs of transport to the country of destination.
  • Customs clearance and payment of duties and taxes related to the export of the goods.

The buyer’s obligations:

  • To carry out the procedure of customs clearance as well as to discharge the rights and taxes which relate to the importation of the goods.
  • To pay the costs and to arrange the transportation from the destination terminal to the arrival point of the goods.
  • Transporting the goods to the destination terminal.

The DAP Incoterm is therefore an Incoterm that places the responsibility on the seller during the major part of the transport of the goods. The buyer is responsible for the last part of the transport. The DAP Incoterm is therefore one of the most favorable multimodal Incoterm for buyers.

Tulyp is a FinTech specialized in Trade Finance. The Tulyp solution supports international trade actors on their payment guarantees, financing, and liquidity issues. If you have any questions you can contact us, one of our experts will contact you within 24 hours.

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Incoterm CPT – Carriage Paid To in details

The CPT Incoterm is a multimodal Incoterm, it concerns all types of goods transport: sea, land, air and rail.

What is the Incoterm Carriage Paid To?

When an international sale is based on the Incoterm CPT, the costs and risks are borne by the seller until the first carrier. The transfer of risk takes place when the goods are handed over to the first carrier. The buyer, however, has to bear the costs of transport when the goods arrive at their destination.

The Incoterm CPT is a so-called general Incoterm and is particularly similar to the Incoterm FCA. It will thus be necessary to apply similar precautions and to specify in addition the share of the charges of unloading as well as the expenses of parking.

The obligations of the seller and the buyer with the Incoterm FOB ?

The obligations of the seller :

  • Prepare the goods to be exported: pack, label and mark.
  • To load the goods on board the main means of transport and to transport the goods from the warehouse to the shipping terminal.
  • Pay and complete export and customs clearance duties and taxes on the goods.
  • Organize the main transport from the shipping terminal to the landing place.

Buyer’s obligations:

  • Unload the goods from the main transport.
  • To pay and complete the import duties and taxes as well as the customs clearance of the goods.
  • To ensure the transport of the goods from the destination terminal to the final destination.

Tulyp is a FinTech specialized in Trade Finance. The Tulyp solution supports international trade actors on their payment guarantee, financing and liquidity issues. If you have any question you can contact us, one of our experts will contact you within 24 hours.

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Incoterm FCA – Free Carrier in details

The FCA Incoterm is a multimodal Incoterm. It is part of the “F” family of Incoterms, a group distinguished by the limitation of the exporter’s obligations to the receipt of the goods by the carrier. This group is often chosen by sellers because it greatly limits the risk they will bear in international transactions.

What is the Free Carrier Incoterm?

The FCA Incoterm limits the seller’s obligations to the delivery of the goods to the carrier chosen by the buyer. Once the export taxes have been paid by the seller and the legal obligations have been fulfilled, the risk is transferred to the buyer. The FCA Incoterm offers two delivery options to the buyer:

  • The carrier chosen by the buyer can pick up the goods at the seller’s warehouse. The costs will have to be paid by the buyer.
  • The seller can pre-route the goods to a point of departure chosen by the buyer.

In both cases, the buyer has to pay the transportation costs. The seller’s only obligations are to clear the goods through customs and to provide the necessary documents for export.

The obligations of the seller and the buyer with the Incoterm FOB ?

When the FCA Incoterm is chosen for an international commercial transaction, the major part of the transport costs is taken by the buyer. The costs and risks are therefore borne mostly by the buyer.

The seller’s obligations:

  • Prepare the goods (pack and label) in order to load them into the means of transport chosen by the buyer.
  • To fill and complete the procedure of customs clearance in the country of export and to pay the taxes and rights so that the goods leave the country of origin.

The buyer’s obligations:

  • He is responsible for organizing and supporting the transportation of the goods from the point of shipment to the final destination.
  • He has to fill and complete the procedure of customs clearance at the importation of the goods. He will have to pay the duties and taxes so that the goods can arrive at their destination.

The Free Carrier Incoterm greatly favors the seller because it clearly limits his obligations contrary to those of the buyer. This Incoterm remains rather flexible, it is thus important to pay attention to certain points and to take precautions:

  • Negotiate the costs of passage in the warehouse.
  • Define the packaging and labeling procedures of the goods.

Tulyp is a FinTech specialized in Trade Finance. The Tulyp solution supports international trade actors on their payment guarantee, financing and liquidity issues. If you have any questions you can contact, one of our experts will contact you within 24 hours.

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Incoterm FOB – Free On Board in detail

The Incoterm FOB is used for maritime transport. It is one of the most known Incoterms in the world of international trade.

What is the Incoterm Free On Board?

Incoterms represent the obligations and responsibilities of the buyer and seller in an international transaction. Incoterms are divided into two main categories: Multimodal Incoterms and Ocean Incoterms. The FOB Incoterm or Free On Board is part of the maritime Incoterms category. In French, the FOB Incoterm is translated as “without expenses on board”.

The obligations of the seller and the buyer with the Incoterm FOB?

The Incoterm FOB is one of the most known Incoterms of maritime transport. It designates the rules of an international commercial exchange between an importer (buyer) and an exporter (seller). Before using the Incoterm FOB as a rule, it is important to know the responsibilities and obligations of the buyer and the seller.

The obligations of the seller and the buyer with the Incoterm FOB?

When the Incoterm FOB is used, the seller bears the responsibility until the exported goods arrive at the vessel chosen by the buyer in the commercial contract.

The seller is responsible for :

  • Packing the goods.
  • Paying the transportation costs to the ship terminal chosen by the buyer in the commercial contract.
  • Loading the goods on board the vessel.
  • Fulfill the customs formalities related to the export of the goods.

With the FOB Incoterm, the buyer becomes responsible for the goods as soon as they are loaded on board the vessel at the departure terminal.

The buyer’s obligations:

  • Pay the transport insurance.
  • Pay the sea carrier.
  • Complete and pay the customs formalities related to the import.

If you decide to use the Incoterm FOB for your international contracts, you must define in advance with your partner the company which will be in charge of the cargo securing costs. This is an important detail in the execution of a commercial contract under Incoterm FOB.

Tulyp is a FinTech specialized in Trade Finance. The Tulyp solution supports international trade actors on their payment guarantee, financing and liquidity issues. If you have any questions you can contact us, one of our experts will contact you within 24 hours.

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Makonnnen Dos Santos

The Incoterm CIF – Cost Insurance & Freight in details

The CIF Incoterm is dedicated to maritime transport. It is one of the most used Incoterms in the world.

What is the “Cost Insurance & Freight” Incoterm?

Incoterms represent the obligations and responsibilities of the buyer and seller in an international transaction. Incoterms are divided into two main categories: multimodal Incoterms and maritime Incoterms. The CIF Incoterm or “Cost Insurance & Freight” is part of the “Maritime Incoterms” category.

The obligations of the seller and the buyer with the CIF Incoterm?

The CIF Incoterms is one of the most widely used Incoterms in the world. Although it is very similar to the CIP Incoterm, it differs in the insurance coverage requirements.

The seller’s obligations:
  • The seller is responsible for the selection and payment of the carrier (shipping line in this case) to the port of shipment as provided for in the commercial contract between the buyer and the seller.
  • The seller is responsible for fulfilling all export requirements, performing the customs clearance procedure, and paying the export duties and taxes.
  • The seller must load the cleared goods on board the vessel.
  • The seller must take out marine insurance, covering the risks of damage and loss of goods. This insurance is an “ad-valorem” insurance with a 10% surcharge on the face value of the contract. The seller takes it out for the benefit of the buyer.
  • The seller must provide the buyer with documents and information relating to the commercial transaction and the security.
The obligations of the buyer:
  • The buyer is responsible for receiving the goods at the port of destination agreed upon in the commercial contract between the buyer and the seller.
  • The buyer is responsible for completing the customs clearance formalities due to the import of the goods.

The CIF Incoterm greatly limits the buyer’s responsibility. The transfer of costs is done at the port of destination and the transfer of risks at the loading of the goods (insurance taken by the seller covering the risk for the buyer).

What are the risks of using the CIF Incoterm?

Although the Incoterm CIF covers mostly the buyer. The seller (supplier) must take out marine insurance and bear the risks during the journey. Many sellers will tend to take out basic insurance which can cause problems for the buyer in case of issues during the logistic process.

Even if the Incoterm CIF is one of the most used in the world, some countries do not allow its use because they impose national insurance linked to the imports. It is therefore important to verify that IncotermCIF is allowed in your country.

Tulyp is a FinTech specialized in Trade Finance. The Tulyp solution supports international trade actors on their payment guarantee, financing and liquidity issues. If you have any question you can contact us, one of our experts will contact you within 24 hours.

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Makonnnen Dos Santos

What are Incoterms for ?

Incoterms – “International Commercial Terms” – are rules of international trade defined by the International Chamber of Commerce every 10 years.

Incoterms define the obligations of the seller and the buyer in a commercial transaction: delivery, insurance, transport, risks, and mandatory documents to settle the payment.

Two main classes

In total, there are 11 different Incoterms, however not all Incoterms work with all types of transport. There are in fact two main classes of Incoterms:

  • Multimodal Incoterms
  • Maritime Incoterms.

Incoterms – Multimodal

Multimodal Incoterms are used when the contract covers one or more modes of transport (Air, Sea, Land, and Rail).

There are 7 multimodal Incoterms covering the obligations of the importer and the exporter during the transportation of the goods from one country to another:

  • EXW – Ex-Works:

    The EXW Incoterm is the Incoterm that is most favorable to the seller. The only obligation of the seller is to make the goods available and packed for export.The risk and the expenses of transport are the responsibility of the purchaser. It is therefore up to the buyer to protect himself to avoid any problem during the transport.

  • FCA – Free Carrier:

    The FCA Incoterm limits the seller’s responsibilities to the clearance of the goods packed for export to the buyer or the carrier designated by the buyer.The risks and costs of transportation are the responsibility of the buyer after customs clearance of the goods.

  • CPT – Carriage Paid To:

    The CPT Incoterm is an Incoterm that shares the responsibility more equally between the buyer and the seller.The seller is responsible for the goods until customs clearance and payment of the main transport. The transfer of responsibility will take place at the agreed place of destination.The buyer will be responsible for all operations from the arrival of the goods at the port of destination.

  • CIP – Carriage Insurance Paid To:

    The seller selects the carrier and pays the freight for the transportation of the goods to the agreed destination. The seller will also take out the transport insurance. The transfer of costs takes place at the place of arrival.The risk of loss or damage shall pass to the buyer upon handover of the goods to the carrier. If successive carriers are used, the risk is transferred on handover to the first carrier.The CIP Incoterm differs from the CPT Incoterm in that the seller is obliged to take out “ad-valorem” insurance (minimum cover at the cost price of the goods). The seller must therefore cover the costs related to the insurance.

  • DAP – Delivered At Place:

    Under the DAP Incoterm, the seller bears the transportation costs and the risk to the main port of arrival or to the delivery point agreed upon between the buyer and the seller.The responsibility, as well as the cost, will be taken over by the buyer at the unloading of the goods in the agreed place. The buyer is responsible for arranging the unloading, import formalities, and paying the related duties and taxes.

  • DPU – Delivered At Place Unloaded:

    The DPU and DAP Incoterms are very similar. The main difference is that the seller will have to pay the charges for unloading the goods at the destination terminal.The buyer will start to bear the risk after the goods have been unloaded at the agreed terminal. The buyer will be responsible for the import formalities and the payment of the related duties and taxes.

  • DDP – Delivered Duty Paid :

    The DDP Incoterm is the most binding Incoterm for the seller. The seller bears the risk and the costs until the goods are delivered to the buyer.The seller will have to pay the transport costs, import duties, and taxes related to the operation. He will also have to take care of the customs formalities.

Incoterms – Maritime

The maritime and river Incoterms are only used when the pick-up points and delivery terminals are ports. They can also be used by importers and exporters when the goods are handed over to the shipping company that handles the freight. This is known as an alongside or on-board delivery.

There are 4 Incoterms specifically for ocean transport:

  • FAS – Free Alongside Ship:

    The maritime Incoterm FAS obliges the seller to pay the transport costs and the assumption of the risks until the port of embarkation as well as to carry out the formalities related to the export of the goods: payment of the expenses, rights, and taxes related to these formalities).The goods shall be delivered alongside the ship in the port designated by the buyer upstream. The buyer will be transferred the costs, formalities, and risks on this occasion.

  • FOB – Free on Board:

    The Incoterm FOB is one of the most widely used Incoterms for ocean transport.The seller is obliged to clear the goods at the port of departure and to deliver the goods to the vessel designated by the buyer. The transfer of charges and risks is done when the goods are loaded on the ship.At the time of loading, it is the buyer who takes responsibility for the goods as well as for the formalities and costs related to the operation.

  • CFR – Cost and Freight:

    For the CFR Incoterm, the seller is responsible for the costs, formalities, and risks up to the main port of destination. Up to this terminal, the seller will have to take care of and pay for the formalities as well as the costs related to the transport.The transfer of costs takes place as soon as the goods arrive at the port of destination. He will have to pay the export clearance charges.The transfer of responsibility will take place when the goods are loaded at the port of departure. It is up to the buyer to take out transport insurance as soon as the goods are loaded at the port of departure.

  • CIF – Cost, Insurance, and Freight:

    The CIF Incoterm is very similar to the CFR Incoterm. The only difference is that the seller is no longer responsible for the goods during transport, but must still take out insurance on behalf of the buyer.The transfer of the expenses is also done with the port of destination and the transfer of the risks with the port of departure.

Tulyp is a FinTech specialized in Trade Finance. The Tulyp solution supports international trade actors on their payment guarantee, financing and liquidity issues. If you have any question you can contact us, one of our experts will contact you within 24 hours.

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