Outline

Faculty of Logistics – International Business

Department of Logistics & SCM – Intro to stages of Int’l Transportation of Goods
-- * --
– INCOTERMS 2010 vs. 2020
Sea Transport

Lecturer: Ms. Pham Le Dung (MIB)

[email protected]

STAGES OF INTERNATIONAL GOODS’ TRANSPORTATION IN THE

TRANSPORTATION OF GOODS INTERNATIONAL TRADE
Customs Clearance
for Export
Export Import
SELLER Clearance Clearance BUYER 2 3 4
SELLER
Stuffing Preliminary
1 Transportation Handling
Goods Loading 5 Outbound
Packing

PRE -CARRIAGE ON-CARRIAGE 6

MAIN CARRIAGE
Insurance
Seller’s Risk
Customs
Main Int’l
Clearance for Transportation 7
Seller’s Cost
BUYER Import
Unloading
11 10 9 8
Acronym (…named location) Unstuffing Final Handling
 Acronym dictates mode and where the lines are drawn Transportation Inbound

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 INCOTERMS 2010 vs 2020 I. HISTORY OF INCOTERMS

1. What are the Incoterms?

1 History of INCOTERMS
•INternational COmmercial TERMS

2 Purposes of INCOTERMS •Incoterms are the set of international rules for the
interpretation of the most commonly used foreign
3 Main features of INCOTERMS
trade terms.
4 INCOTERMS 2010 Introduction •“INCOTERMS define the mutual obligations of
seller and buyer arising from the movement of
5 Structure & Rules of INCOTERMS 2010
goods under an international contract from the
6 INCOTERMS 2010 vs. 2020 standpoint of risks, costs and documents.”
(UNCTAD, 1990)

I. HISTORY OF INCOTERMS II. PURPOSE OF INCOTERMS

2. History of Incoterms 1. Why are Incoterms important?

•INCOTERMS® initially created in 1936 by the
International Chamber of Commerce (ICC) and • To reduce the uncertainty caused by trade
have been periodically revised. practices in different countries.
•INCOTERMS® reflect world-wide trade practices, as
practices change, INCOTERMS® are revised. • To simplify the negotiations involved in
•Revisions 1953, 1967, 1976, 1980, 1990, 2000, international commerce.
2010, 2020.
•INCOTERMS 2010 entered into force on 1st January 2011. • To ensure common understanding of obligations.
•INCOTERMS 2020 entered into force on 1st January 2020.

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 II. PURPOSE OF INCOTERMS III. MAIN FEATURES OF
INCOTERMS
2. Purpose of Incoterms 1. What do the Incoterms deal with?
•To lay down/ to establish international rules for
Incoterms will define the liability point for three
the interpretation of trade terms in international main activities:
trade contracts. •Carriage (transport obligations): to identify
•To avoid misunderstandings as a result of different which party (seller or buyer) is responsible for
commercial practices. arranging carriage of the goods (responsibility for
transport/ transport rights).
•INCOTERMS in no way cover all obligations which
•Risk (passing of risks): to identify the point along
the parties to a sales contract might wish to set the journey where responsibility for risk to the goods
down. will pass from the seller to the buyer.
•INCOTERMS do not apply to contracts of carriage. •Cost (cost division): to identify the point at which
cost transfers from the seller to the buyer.

III. MAIN FEATURES OF IV. INCOTERMS® 2010 vs. 2020

INCOTERMS INTRODUCTION
2. What do INCOTERMS® not deal with? 1. New rules of 2020 version: DPU
1) EXW – Ex Works
• Questions of ownership 2) FCA – Free Carrier
• Breach of contract and the legal consequences 3) FAS – Free Alongside Ship
4) FOB – Free On Board
• Declarations of indemnity
5) CFR – Cost and Freight
• Delivery options 6) CIF – Cost, Insurance & Freight

• Modes of payment 7) CPT – Carriage Paid To Incoterms 2020

8) CIP – Carriage & Insurance Paid To
• Notice of defects 9) DAT – Delivered At Terminal  DPU – Delivered at Place Unloaded
10)DAP – Delivered At Place
11)DDP – Delivered Duty Paid

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 IV. INCOTERMS® 2010 vs. 2020 IV. INCOTERMS® 2010 vs. 2020
INTRODUCTION INTRODUCTION
2. Classification of the 11 rules 2. Classification of the 11 rules
2.1. Rules for any mode of transport 2.2. Rules for sea and inland waterway transport
EXW : EX WORKS  FAS : FREE ALONGSIDE SHIP
FCA: FREE CARRIER  FOB : FREE ON BOARD
CPT: CARRIAGE PAID TO  CFR : COST AND FREIGHT
CIP : CARRIAGE AND INSURANCE PAID TO  CIF :COST, INSURANCE AND FREIGHT
DAT: DELIVERED AT TERMINAL
(2020) DPU: DELIVERED AT PLACE UNLOAD
 How to remember?
DAP : DELIVERED AT PLACE
DDP : DELIVERED DUTY PAID

IV. INCOTERMS® 2010 vs. 2020 IV. INCOTERMS® 2010 vs. 2020
INTRODUCTION INTRODUCTION
3. What do INCOTERMS® 2010 & 2020 deal with? 4. Notes
• The principal duties of the seller & the buyer. • It is not mandatory to use INCOTERMS® in
• Transport obligations – who has transport rights a sale contract.
• Transfer of risks – place and point in time. • INCOTERMS® are not price clauses, but do
• Allocation of all costs incurred from dispatch have an impact on the pricing.
to arrival at the place or port of destination. • Sales contracts which are based on a
• Formalities (e.g. customs formalities) for former version (e.g. INCOTERMS® 2000)
import, export or transit. remain valid according to the terms of that
version.

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 IV. INCOTERMS® 2010 vs. 2020 V. STRUCTURE & RULES OF
INTRODUCTION INCOTERMS® 2010 & 2020
4. Notes Seller’s obligations (A) Buyer’s obligations (B)
• Buyers and sellers should refer to the
appropriate version of the INCOTERMS® 1. General obligations of the seller 1. General obligations of the buyer
2. Licences, authorisations, security 2. Licences, authorisations, security
e.g. FOB Hamburg, INCOTERMS® 2010. clearances and other formalities
clearances and other formalities
3. Contracts of carriage and insurance
• It is possible to add clauses or change the 3. Contracts of carriage and insurance
4. Delivery 4. Taking delivery
wording of INCOTERMS®. 5. Transfer of risks 5. Transfer of risks
e.g. 6. Allocation of costs 6. Allocation of costs
7. Notices to buyer 7. Notices to seller
CFR Charleston port USA incl. THC, CUC in Charleston.
8. Transport document 8. Proof of delivery
FCA Vienna Airport loaded on aircraft. 9. Checking – packing – marking 9. Inspection of goods
DDP Hanoi Vietnam VAT unpaid. 10.Assistance with information and 10.Assistance with information and
related costs related costs

V. STRUCTURE & RULES OF V. STRUCTURE & RULES OF

INCOTERMS® 2010 & 2020 INCOTERMS® 2010 & 2020
The ‘E’ Group (i.e.
E All transport charges
are forward to
F Cost to loading are
prepaid by seller, from E EXW) requires the
buyer to take
F The ‘F’ Group (i.e.
FCA, FAS, & FOB)
requires the seller to
collect at destination that point on the main delivery of the goods deliver goods to a
from the buyer. freight charge is paid at the buyer’s carrier.
premises.
by buyer.
The ‘C’ Group (i.e. CFR, The ‘D’ Group (i.e.
C Costs to main port or
airport of destination
D All charges prepaid
to named destination
C CIF. CPT &
requires the seller to
CIP) D DAP, DPU, & DDP)
requires the seller to
are prepaid by seller, by seller this may or arrange and pay for bear all costs and risks
remainder paid by may not include carriage, but the seller does of bringing the goods
not assume the risk for loss or to the buyer’s country.
buyer. taxes. damage once the goods are
delivered to the carrier.

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 V. STRUCTURE & RULES OF
INCOTERMS® 2010 & 2020

Question:
RULES FOR THE USE OF
INCOTERMS® 2010
Where is the liability point of
each party in the 11 terms of
Incoterms 2010 vs. 2020?

INCOTERMS® 2010 INCOTERMS® 2010

1. E GROUP 1. E GROUP
EXW: Ex works + Named place EXW: Ex Works + Named place
• Named place is where the shipment
originates – usually the seller’s premises.
• Seller must have goods available and EXW
Customs Customs

packaged when promised. CY/ CFS/ ICD CY/ CFS/ ICD

• Buyer must arrange pre-carriage, export Port of Port of

Seller Buyer
shipment destination
clearance, main carriage, import clearance and
COST
on carriage.
• Neither party is required to insure.
RISK
• Transport Mode: All.

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 INCOTERMS® 2010 INCOTERMS® 2010
2. F GROUP 2. F GROUP
2.1. FCA: Free carrier + Named place 2.1. FCA: Free carrier + Named place
• Named place is either the place where the
shipment originates such as the seller’s premises or
another place agreed within the seller’s country. Customs Customs
• Seller is to have goods available and packaged CY/ CFS/ ICD CY/ CFS/ ICD

FCA
when promised, load collecting vehicle, pre- Port of Port of
Seller Buyer
carriage and export clearance. shipment destination

• Buyer must unload delivering vehicle, main COST

carriage, import clearance and on carriage.
• Neither party is required to insure. RISK

• Transport mode: All modes.

INCOTERMS® 2010 INCOTERMS® 2010

2. F GROUP 2. F GROUP
2. FAS: Free alongside ship + Named port
2.2. FAS: Free alongside ship + Named port
• Named port is alongside a vessel at port on
the seller’s side
• Seller is to deliver goods, export packed Customs FAS Customs
CY/ CFS/ ICD CY/ CFS/ ICD
alongside the buyer-designated vessel at the port
on the seller’s side along with export clearance. Seller Port of Port of
Buyer
shipment destination
• Buyer loads vessel, arranges main carriage,
COST
import clearance and on carriage.
• Neither party is required to insure. RISK
• Transport Mode: Vessel Only.

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 INCOTERMS® 2010 INCOTERMS® 2010
2. F GROUP 2. F GROUP
2.3. FOB: Free on board + Named port 2.3. FOB: Free on board + Named port
• Named port is loaded on a vessel at a port on
the seller’s side
FOB
• Seller delivers the goods on board the buyer- Customs Customs
CY/ CFS/ ICD CY/ CFS/ ICD

designated vessel at the port on the seller’s side

along with export clearance. Seller Port of Port of
Buyer
shipment destination
• Buyer arranges main carriage, import COST
clearance and on carriage.
• Neither party is required to insure. RISK
• Transport mode: Vessel Only.

INCOTERMS® 2010 INCOTERMS® 2010

3. C GROUP 3. C GROUP
3.1. CFR: Cost and freight + Named port 3.1. CFR: Cost and freight + Named port
• Named port is on the buyer’s side.
• Seller delivers goods export packed on board the
CFR
seller’s designated vessel at the port on the seller’s Customs Customs
CY/ CFS/ ICD
CY/ CFS/ ICD

side, pays transportation costs to the agreed port

on buyer’s side, and arranges export clearance. Seller Port of Port of
Buyer
shipment destination
• Buyer arranges vessel unloading, import COST
clearance and on carriage.
• Neither party is required to insure. RISK
• Transport Mode: Vessel Only.

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 INCOTERMS® 2010 INCOTERMS® 2010
3. C GROUP 3. C GROUP
3.2. CIF: Cost, insurance & freight + Named port
3.2. CIF: Cost, insurance & freight + Named port
• Named port is on buyer’s side. CIF = CFR + Insurance
• Seller delivers goods export packed on board the
CIF
seller’s-designated vessel at port on seller’s side, pays Customs Customs
CY/ CFS/ ICD CY/ CFS/ ICD

all transportation costs to agreed port on the buyer’s

side and arranges export clearance. Seller Port of Port of
Buyer
shipment destination
• Buyer arranges import clearance and on carriage.
COST
• Seller must provide insurance at least minimum
coverage. RISK
• Transport Mode: Vessel Only.

INCOTERMS® 2010 INCOTERMS® 2010

3. C GROUP 3. C GROUP
3.3. CPT: Carriage paid to + Named place
3.3. CPT: Carriage paid to + Named place
• Named place is on buyer’s side.
• Seller delivers goods export packed to the
CPT
carrier for transportation to the named place of Customs Customs

destination and will pay all transportation costs CY/ CFS/ ICD CY/ CFS/ ICD

thereto along with arranging export clearance. Seller Port of Port of Named
shipment destination place Buyer
• Buyer arranges import clearance and on
COST
carriage.
• Neither party is required to insure.
RISK
• Transport mode: All modes.

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 INCOTERMS® 2010 INCOTERMS® 2010
3. C GROUP 3. C GROUP
3.4. CIP: Carriage & insurance paid to + Named place 3.2. CIP: Carriage and insurance paid to + Named place
• Named place is on buyer’s side. CIP = CPT + Insurance
• Seller delivers goods export packed to the carrier
CIP
for transportation to the named place of destination Customs Customs
and pays all transport costs thereto along with CY/ CFS/ ICD CY/ CFS/ ICD

arranging export clearance.

Port of Port of Named
• Buyer arranges import clearance and on carriage. Seller place Buyer
shipment destination
• Seller must provide at least minimum insurance COST
coverage.
• Transport Mode: All Modes. RISK
.

INCOTERMS® 2010 INCOTERMS® 2010

4. D GROUP 4. D GROUP
4.1. DAT: Delivered at terminal + Named place 4.1. DAT: Delivered at terminal + Named place
• Named place is at terminal on buyer’s side (a
terminal at the destination port or a terminal not far
beyond the destination port where it’s yet to be DAT
Customs Customs
cleared by Customs) CY/ CFS/ ICD CY/ CFS/ ICD

• Seller arranges export clearance and delivers goods

Port of Port of Named
Seller Buyer
export packed to the named destination terminal, pays all shipment destination place

transport costs thereto and unloads. COST

• Buyer arranges import clearance and on carriage.
• Neither party is required to insure RISK
• Transport Mode: All Modes.

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 INCOTERMS® 2010 INCOTERMS® 2010
4. D GROUP 4. D GROUP
4.2. DAP: Delivered at place + Named place 4.2. DAP: Delivered at place + Named place
• Named place is on buyer’s side.
• Seller arranges export clearance, delivers export
DAP
packed goods to the named place of destination Customs Customs

and pays all transportation costs thereto. CY/ CFS/ ICD CY/ CFS/ ICD

• Buyer arranges import clearance and on Seller Port of Port of Named

Buyer
shipment destination place
carriage.
COST
• Neither party is required to insure.
• Transport mode: All Modes. RISK

INCOTERMS® 2010 INCOTERMS® 2010

4. D GROUP 4. D GROUP
4.3. DDP: Delivered duty paid + Named place 4.1. DDP: Delivered duty paid + Named place
• Named place is on buyer’s side.
• Seller arranges export clearance, delivers export
DDP
packed goods cleared for import at the named Customs Customs
CY/ CFS/ ICD
destination and pays all transportation costs CY/ CFS/ ICD

thereto. Seller Port of Port of Named

Buyer
shipment destination place
• Buyer possibly responsible for unloading, on
COST
carriage.
• Neither party is required to insure. RISK
• Transport Mode: All Modes.

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 SUMMARY
OTHER NOTES INCOTERMS® 2010
TÓM TẮT

Lưu ý quan trọng:  Incoterms Introduction Video:

1.Trách nhiệm thuê phương tiện vận tải: https://www.youtube.com/watch?v=Xwp1_uQ6TPY
* Nhóm E, F: người mua. Địa điểm giao hàng tại nơi đến.
* Nhóm C,D: người bán .Địa điểm giao hàng tại nơi đi.
4 điều kiện chỉ áp dụng cho vận tải đường biển và đường thủy nội địa: FAS, FOB, CFR, CIF:
với địa điểm chuyển giao hàng là cảng biển.
2.Trách nhiệm về mua bảo hiểm đối với hàng hóa:
* Nhóm E, F: người mua
* Nhóm D : người bán
* Nhóm C : CIF, CIP: người bán > < CFR, CPT: người mua
3.Trách nhiệm về làm thủ tục hải quan đối với hàng hóa:
Import Nhập khẩu: Xuất khẩu:
Duty
* DDP: người bán * EXW: người mua
* 10 điều kiện còn lại là người mua * 10 điều kiện còn lại là người bán

OTHER NOTES OTHER NOTES

• When the goods are packed in containers, it is • When CPT, CIP, CFR or CIF are used, the
usual for the seller to hand the goods over to the seller fulfils its obligations to deliver when it
carrier at container yard (CY) in case of full-container- hands the goods over to the carrier and not
load (FCL), or at container freight station (CFS) in case when the goods reach the destination.
of less-than-container-load (LCL). • In case parties intend to use DAT but the

Should not use Should use

seller is expected to bear the risks and costs
FOB FCA involved in transporting and handling the goods
CIF CIP from the terminal to another place, DAP or DDP
CFR CPT rules should be used.

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 INCOTERMS 2020 INCOTERMS 2010 vs. 2020

INCOTERMS 2010 vs. 2020 INCOTERMS 2010 vs. 2020

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INCOTERMS 2010 vs. 2020 INCOTERMS 2010 vs. 2020

INCOTERMS 2010 vs. 2020 INCOTERMS 2010 vs. 2020

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INCOTERMS 2010 vs. 2020 INCOTERMS 2010 vs. 2020

INCOTERMS 2010 vs. 2020 INCOTERMS 2010 vs. 2020

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 INCOTERMS 2010 vs. 2020 INCOTERMS 2010 vs. 2020

INCOTERMS 2020 REVIEW QUESTIONS

• [Video] Incoterms 2010 vs. 2020 1) Why Incoterms are to be revised every
https://www.youtube.com/watch?v=AJXXBhY9rAM 10 years, particularly for Incoterms 2010
to the 2020 version?
• [Video] Incoterms 2020 key changes | Tiếng Việt
Điều kiện giao hàng Incoterms 2020 - Những thay đổi chính:
https://www.youtube.com/watch?v=ioxSfwIfeZ4
https://www.youtube.com/watch?v=AJXXBhY9rAM
2) What are the similarities and differences
between Incoterms 2010 and Incoterms
• Incoterms 2020 mới nhất từ ICC 2020?
https://www.youtube.com/watch?v=PvYpAQrf3Tw
https://www.youtube.com/watch?v=QmPZdftLDmQ

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 REVIEW QUESTIONS REVIEW QUESTIONS

3) Summarize the liability point of each 4) What are the advantages of the parties
party involved (seller and buyer) in who take responsibility for arranging
Incoterms 2020, in terms of : carriage/ transport of the goods in the
(a) transport obligation international trade? Explain and give
(b) risk transfer examples.
(c) cost allocation

REVIEW QUESTIONS REFERENCES

1) Nguyen thi Thu Ha (2014), Transportation of goods by sea and

5) What is the difference between: marine cargo Insurance (Monographic Book), VNU-HCM
Publishing House.
FOB & FCA, CIF & CIP, CFR & CPT? 2) Nguyen thi Thu Ha & Nguyen Xuan Minh (2016), Import – Export
Operations, VNU-HCM Publishing House.
3) Singapore Logistics Association (2014), The Practitioner’s
Definitive Guide: Seafreight Forwarding, Strait Times Press
Publishing House.
4) ICC (2011), Rules for the use of International Trade Terms,
translated by Nguyen Van Dung, Lao Dong Publishing House.
5) Logistics Consultants PF Collins International Trade Services (2003),
Transportation Best Practice Manual, Canadian Manufacturers
and Exporters Newfoundland and Labrador Division.
6) Goh Ying Yi (2020), “Incoterms 2010 vs. 2020”,
https://www.youtube.com/watch?v=AJXXBhY9rAM

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