FOB? CIF? DAP? EXW? What does it mean? I was wondering when I started working in an elevator company, I never heart about those terms before and I was listening to them very often when the import analyst made arrangements to import the elevators.
Then she explained to me that those words where actually acronyms, which were all INCOTERMS, rules used to operate international commerce to delimitate responsibilities and define negotiation terms.
So now I am looking forward to get to know a little more about INCOTERMS, and I found an interesting article at DHL webpage. INCOTERMS are defined “as a set of norms for international deliveries, in order to guarantee the smooth sailing of international trade”.
I also found out that there are 11 INCOTERMS and that they follow the structure of a three-letter acronym followed by a location name. Four are designed specifically for ocean freight and the seven remaining are used to cargo delivered via any type of transport.
This INCOTERMS set the standard on the responsibilities of the seller and the buyer in a transaction. For example, they define who will take care of the insurance, to what location, who will take care of the transportation, to what extent, etc.
It is also important to mention that INCOTERMS had some changes and the latest version is the 2020 edition where basically it is pointed out that INCOTERM DAT (Delivered at Terminal) is renamed to Delivered at Place Unloaded (DPU) and that INCOTERM FCA (Free Carrier) now allows for Bills of Lading to be issued after loading.
To get to know all these INCOTERMS, the following infographic is very helpful.
UNDERSTAND & MAKE THE MOST OF INCOTERMS® 2020. https://www.dhl.com/global-en/home/our-divisions/global-forwarding/forwarding-insights/linkedin/understand-incoterms.html
The blog of Logistics at MGEPS at UPV 