Utility INCOTermsIndex

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What are INCO terms?

The terms of sale for International business are more complex than those used in domestic contracts so in the 1920's international traders developed a set of trade terms to describe their rights and obligations with regard to the sale and transport of goods. These terms consisted of short abbreviations for lengthy contract provisions. Unfortunately there was no uniform interpretation of these terms so to improve this the International Chamber of Commerce (ICC) developed INCO terms (INternational COmmercial Terms). First published in 1936 these rules have been periodically revised to account for changing modes of transport, document delivery and security.

The latest revision INCO terms 2020 came into force on January 1st 2020

INCO term Groups

There are 4 groups

• E- Departure – Seller merely makes goods available to the buyer and the seller is not responsible for the carriage, risks or cost of transportation.

• F- Main Carriage Unpaid – Seller has full responsibility (carriage, risk and cost) to get the goods to the point where the main transportation starts. Typically this means to a ship or a port. In SkySuite transport chains we call this the handover point.

• C- Main Carriage Paid – very similar to Group F except that the seller is responsible for some elements (Cost and/or risk) during the main transportation

• D- Arrival – Seller is responsible for some elements beyond the completion of the main transportation

EXW - Ex Works

Under EXW terms the seller merely makes the goods available to the buyer at the "named place of delivery". This is commonly, but not necessarily the seller's place of business. With EXW the seller has no responsibility to load the goods onto a truck or other transport vehicle or to clear the goods for export. This term places the greatest responsibility on the buyer and the least on the seller.

In SkySuite the transport chain for EXW Inco terms would likely have a handover point matching the place where the supplier is warehousing his goods and the transport time to that handover point will be zero.

FCA - Free Carrier

Under FCA terms the seller clears the goods for export and delivers them to the carrier specified by the buyer at the "named place of delivery" If the named place of delivery is where the supplier is warehousing his goods, the seller is responsible for loading the goods onto the transport vehicle. If the named place of delivery is any other location, the seller delivers by making the goods available for unloading from the sellers means of transport at the named place of delivery.

In SkySuite the transport chain for FCA INCO terms would have a handover point matching the named place of delivery and the transport time to that handover point will be the time it takes the seller to load and transport the goods to that location.

FAS - Free Alongside Ship

Under FAS terms the seller clears the goods for export and places them alongside the ship (as on a quay or barge) at the named port of shipment.

In SkySuite the transport chain for FAS INCO terms would have a handover point matching the named port and the transport time to that handover point will be the time it takes the seller to load and transport the goods to that location plus the time to place them alongside the ship.

FOB - Free On Board

Under FOB terms the seller clears the goods for export and delivers them on board the vessel at the named port of shipment.

In SkySuite the transport chain for FOB INCO terms would have a handover point matching the named vessel and port and the transport time to that handover point will be the time it takes the seller to load and transport the goods to that location plus the time to load the vessel.