Question

What are the most common Incoterms used in global commerce and how do they differ in risk and cost to the seller?

Answer 1

Below are the five common Interco terms:

• Delivery Duty paid: It is when sellers own the delivery of goods until goods are placed for loading at destination place. The seller bears all the risk and has to bear both cost of importing and exporting.
• Ex works: It is when goods are available to buyer from seller’s facility directly. The risk is borne by buyer and transportation cost is also borne by buyer.
• Cost and Freight: In this seller is responsible for cost to transport of goods to port of destination. The risk of any loss or damage is borne by buyer and cost is borne by seller.
• Cost, insurance and Freight: The seller is responsible for cost to transport of goods to port of destination and agrees to buy insurance for any loss or damage. The cost is borne by the seller and any damage or loss is borne by insurance provider.
• Freight on board: Seller is only responsible for loading of goods to source port and ownership gets transferred once goads are loaded. Risk and costs are borne by the buyer.