What Is Inco Terms , How Inco Terms works - YouTube

Hello All, welcome to import export

Today we talk about inco terms

Incoterms is very import things in import export industry

you should be know every incoterms on your finger tips

if you are in purchase department then you must know incoterms for negotiation

if you in account team and you want to release the international payment then again you must know the these terms

if you work in bank and handling the lc then again you must know these terms

in these video i would define how many types of incoterms exist

as you can see in this chart there is multiple incoterms mentioned here

exworks, fca, fob cfr

dat dap for

they i'll let you understand all incoterms with the help of example

so when you hear this next time so got to know where which one should be use

so lets go for our first slide

first basic question what is incoterms

inco terms also known as delivery terms

means how delivery will be done

suppose this is a exporter

and she is an importer

exporter want to sell this part to this importer

for selling, how shipment will be route

first this shipment load here and move forward

route i'll explain in next slide

so who responsible till which point

that point define by inco terms.

that is why inco terms used in import

then next question who regulated incotmers

incoterms regulated by ICC international chamber of commerce

this is an organization who amend time to time these terms

because some time importer exporter catch the loop whole

then they start to missuse this

that is why icc amend it time to time

when icc amend then they gave new name to incoterms

earlier incoterms was 2010

but current incoterms 2020 in on use

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So i will make another video on this topic

so lets go to our next slide

first we understand the exworks terms

first thing you need to remember

if you want to understand the incoterms

so first you must know the shipment route

how shipment route

on which points its touches

then you will be understand which one responsibility on which point

so first with this example we understand the route before incoterms

and its rule

suppose this is a seller in Germany

and this one in india we said him as importer or buyer

and he is outside of country so he is a exporter

now exporter manufacture this shipment

so this shipment need to reach in india here

so how shipment go there

every thing should be define at every point charge the money cost

this shipment packed here

first loaded in truck

this truck reach nearest port

if by air shipment

or via ship, that is why taken both example

for air shipment will be route through air

if via sea then reach sea port and other formalities is there

i m telling you only point

then there will be one CHA who perform clearance

if CHA doing this

so he will charge for that

which shipment loaded here who also charge for that

then vehicle reach here

on port or airport there will be charge for unloading and stuffing

and loading cost will be applicable here

when shipment cleared from custom

then this shipment will be onboard on ship or airplane

so this cost applicable

and handling charges, freight cost

same on airport loading charges

after that shipment reach in india port

which port, nearest port of buyer

then same condition shipment will be unload

so CHA will perform clearance import pay the duty

after clearance there will be handling cost loading cost truck cost

you must know these point remember it this is route

so lets go exworks terms

this is exworks example

suppose

this shipment need to reach at import point

seller will said what price we have given this is exworks basis

means exporter only manufacture the part and keep ready as box at his premises

after that our responsibility over

after that import responsibility send the vehicle and his agent to pick the shipment

so exporter only responsibility keep ready the box or container

after dispatch

exporter responsibility over

hope you understand what is exworks

means all responsibility is for importer only

so lets go next terms

second is FCA or FOB

both will explain

we have taken same example

shipment has been ready

now seller said our price is basis FCA

first we understand FCA

in this example you will be understand difference between FCA & FOB

in FCA exporter made the box

after that exporter load the shipment in truck

after loading

in FCA shipment

truck will reach on airport

so exporter arrange the shipment till airport

if this shipment FOB basis then shipment reach sea port instead of airport

so shipment reach at sea port

after that responsibility will be buyer for shipment

so exporter responsibility till port or airport only

that is why after FCA or FOB port name need to mentioned

after port all things handle by importer no role of exporter from this point

There is one point i want to add, Specially in India

if shipment route through air but buyer can demand i want FOB only

our standard is FOB

So exporter have no option he mentioned FOB even shipment in air mode, This is possible in India

so lets go to next terms

next is CFR, CIF, CIP AND CPT

i have all these four terms because point can be same on all these terms

so you can understand what is difference among them easily

to avoid the confusion

most of the case CFR

nearest port of importer

or nearest sea port of importer, so in CFR

Exporter dispatch the shipment to port

also done custom clearance

load in airplane or ship and dispatch the shipment

after that shipment enter in India

so from here exporter role over

after that all responsibility taken care by importer

this is clear very simple

second is CIF

same exporter dispatch this shipment from there port but insurance will be add here

which insurance cost applicable here

it will be bear by exporter

rest will be same after that shipment taken care by importer

next is CIP

so P is stand for port or place

in CIP insurance is optional

till this point cost bear by exporter

but there will be agreement between exporter and importer

which define who will bear the insurance cost if no agreement then exporter will bear this cost

but can be optional

next is CPT

CPT also work same but

only insurance difference

in CFR there was no insurance

in CIF insurance bear by exporter

in CIP insurance was optional

but there is possibility import also can pay insurance cost

so in CPT case importer will pay insurance cost

so exporter dispatch the shipment from port and insurance cost bear by buyer

also loading unloading

means exporter transaction complete after dispatch

but in CIF CIP CPT insurance will be involve

so this is the difference hop you understand

so lets go to next slide

next is DAT and DAP

there is also one more terms DDU that is same duty will not be involved for exporter

T stand for terminal means have to delivered at terminal

but in case of place, suppose importer is belong to Delhi

and his factory in Gurgaon

so buyer mentioned delivery terms as

DAP Gurgaon

so exporter have to delivered the shipment till Gurgaon

so shipment need to reach importer factory

all cost bear by exporter but only duty will pay by importer

after all formalities done shipment reach in India

so duty will pay only buy buyer rest exporter

that is why importer mentioned Gurgaon as delivery terms

so mange everything

we can only pay duty & tax

hope you understand now

next is DDP and FOR

what was the last terms all cost bear by exporter only duty importer

suppose importer mentioned DDP Gurgaon

now exporter have delivered shipment at Gurgaon along with duty

this terms use mostly like sample shipment or foc shipment

means importer don't want any tension

all charges born by exporter only

no responsibility of importer

then what is FOR free on road

officially there is no incoterms is FOR

Its made by Indian not by ICC

This means nothing but we are Indian we want to do something unique

no Indian organization said use FOR

internationally FOR means nothing

but some buyer demand we accept only FOR

So its means is same as DDP

delivery will be done by exporter but not officially

in case of LC then you must mentioned DDP not FOR

Keep remember FOR is nothing but in India FOR works same like DDP

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