Vocabulary【Incoterms】
incoterms
Incoterms, or International Commercial Terms, are rules which describe the responsibilities of buyers and sellers when delivering goods.
They determine which costs should be paid by whom.
These costs include loading and unloading, insurance, carriage, and customs clearance.
Here are a few common incoterms used today.
incoterm: International Commercial Terms
customs: 海关
customs clearance: 报关
EXW
Under Ex Works terms, the seller makes the goods available at a designated location, normally at the seller's factory or depot.
Once the goods are placed at the buyer's disposal, the buyer shall be responsible for all costs and risks related to them, such as transport costs, loading costs and insurance.
EXW terms are favorable to the seller as it poses minimum obligation to them.
designate: 指定
depot: 仓库
disposal: 出售，处理
at sb's diaposal: 供某人使用
pose: 构成
FOB
Under Free on Board terms, the seller bears all costs and risks that are related to getting the goods to the port and onto the ship.
Once the goods are loaded, the risk of loss or damage to the goods will be transferred to the buyer.
In most countries, FOB is only used for transport by waterway.
bear: 承载
waterway: 水路运输
CFR
Under Cost and Freight terms, the seller is responsible for transporting the goods to the importer's port.
This means the seller must pay all the charges of shipment until the goods arrive at the port of destination.
However, the seller is not responsible for any loss or damage to the goods that occurs in shipping.
The risk will be passed to the buyer when the goods are on board the vessel.
freight: 货物
vessel: 船
CIF
Under Cost, Insurance, and Freight terms, the responsibilities are similar to CFR.
The seller is still responsible for transporting the goods to the importer's port.
However, the seller must obtain insurance for the goods being transported to the port.
The seller must also provide documents representing cost, insurance, and freight of CIF.
Once the carrier gives the documents to the buyer, the seller's obligation ends.
DDP
Under Delivered Duty Paid terms, the seller assumes all costs and responsibilities other than unloading.
These include shipping, duties, insurance, and any other expenses.
This makes DDP the most favorable incoterm for the buyer, since the seller bears maximum responsibility.
other than: 除了
unload: 卸下
Question
- It's imperative for traders to understand the obligations that come with the use of a certain incoterm.
- Ex Works terms put maximum responsibility on the buyer with minimum responsibility on the seller.
- If traders are using FOB terms, the buyer assumes the risk after the cargo is on board.
- CFR's pricing mechanism involves the seller having the responsibility to get the goods from their warehouse to the destination port.
- DDP places maximum responsibility on the seller, making it the most favorable incoterm for the buyer.
imperative: 迫切的
assume: 承担
