International rules for the interpretation of internationally accepted trade terms
Two new trade terms (DAT and DAP) replaced the existing four ones (DAF, DES, DEQ, and
DDU), resulting in a total of 11 categories.
Incoterms, which have traditionally been used in the international trade, have been officially recognized to apply to the
domestic trade through this revision.
And, the available transportation methods have been classified into two types: multi-modal transportation and maritime
transportation.
Multi-modal transportation EXW, FCA, CPT,
CIP, DAT, DAP, DDP
Maritime transportation FAS, FOB, CFR,
CIF
Based on the following
11 price terms, the logistics cost that exporters are required to bear gets increasingly higher as they move from the
conditions E to D.
EXW : Ex Works
* Minimum duty for exporters, but maximum burden for importers.
* After packaging is completed by the exporters, the burden of risks and costs is passed on to the importers.
All logistics costs are borne by the importers. The condition is the opposite of the DDP term.
FCA : Free Carrier
* EXW + shipping expenses to a place of delivery
* After packaging is completed by the exporters, the burden of risks and costs is passed on to the importers.
All logistics costs are borne by the importers. The condition is the opposite of the DDP condition.
FAS : Free Alongside Ship
* EXW + shipping expenses to a place of delivery
* Exporters bear the cost of packaging for export and transportation costs to the designated delivery place.
FOB : Free on board
* In practice, it is the most commonly used condition along with the CIF term,
and importers have the right to designate ships and to enter into contracts for carriage.
* The cargo is considered to be delivered by exporters after they are loaded on board, including packaging for export
+ inland transportation + customs clearance for export + incidental charges for export in the shipping
countries.
CFR : Cost and Freight
* Exporters pay FOB + ocean freight costs to the port of destination specified
by the importing countries.
* Exporters have the right to designate ships and to enter into contracts for carriage. (same as C and D terms)
CIF : Cost Insurance and Freight
* Exporters pay CFR + marine insurance premium.
CPT : Carriage Paid To
* It can be applied when changing the CFR term, which is the ocean transport
term, to the multi-modal transport method.
* FCA + transportation costs to the designated place of delivery (The destination is an agreed point on land, not at
sea.)
* It is a condition to bear the logistics cost to the designated place of delivery as the destination, not the
port.
* It is a condition that exporters bear all logistics costs to the place of delivery designated by importers.
CIP : Carriage and Insurance Paid to
* It can be applied when changing the CIF term, which is the ocean transport
term, to the multi-modal transport method.
* CPT + obligation to conclude an insurance contract
DAT : Delivered at Terminal
* It is a condition that replaces the DEQ term of Incoterms 2000.
* The obligation for risks and costs ends when the goods are placed at the disposal of importers after they have been
unloaded at their terminal.
* DAT UTC Terminal, Busan, Korea (It is a condition that the exporters bear the risks and costs until the goods
unloaded at Korea's Uam Terminal are placed at the disposal of the importers.)
DAP : Delivered at Place
* It replaces the DAF, DES, and DDU terms of Incoterms 2000. The place of
delivery may be a port or any point inland.
* The obligation for risks and costs ends when the goods are placed at the disposal of importers, including DAT +
shipping charges to the designated place.
* Importers bear the payment of import duties, VAT, and customs clearance fees.
DDP : Delivered Duty Paid
* DAP + import duties, VAT, and other taxes / Maximum duty for sellers
* All logistics costs are borne by the exporters. The condition is the opposite of the EXW term.
