It is highly recommended to read the post about CPT Incoterms on Shipup Blog in addition to current post.

1. Who is responsible for Contacting the carriage and Insurance in CIP Incoterms?

– The seller must contract for the carriage to the named place at destination. He also is obliged to contract for the insurance cover against the buyer risk of loss or damage during the carriage. The seller is required to obtain insurance only on minimum cover under CIP Incoterms.

2. What is the main difference between CPT and CIP Incoterms and which one is preferable?

– The only difference  is that under CIP the seller must obtain and pay for cargo insurance. This is particularly important for the buyer, since under CIP the risk of loss of or damage to the goods will pass from the seller to the buyer when the goods have been delivered to the carrier at the place of delivery.

3. How about the duration of insurance Under CIP Incoterms?

– The insurance must cover the buyer risks and protect him from the moment the goods have been delivered to the carrier at the place of delivery. It must extend until the goods arrive at the agreed place of destination or an agreed point within that place.

4. Which type of insurance is mandatory in CIP Incoterms?

– The seller is obliged to obtain cargo insurance at its own expenses at least with the minimum cover as provided by Clauses (C) of the Institute Cargo Clauses (LMA/IUA) or any similar clauses. Some particular risks require additional insurance. If the buyer requests it, the seller must arrange this additional cover at the buyer’s expense. For example, insurance against the risks of war, strikes, riots and civil commotion – if this cover can possibly be arranged.

5. How much is the amount of insurance in CIP Incoterms?

– The amount of the insurance should correspond to the price provided in the contract, plus 10 per cent. The additional 10 per cent is intended to cover the average profit which buyers of goods expect from the sale. The insurance should be provided in the same currency as stipulated in the contract for the price of the goods. Consequently, if the price of the goods is to be paid in convertible currency, the seller may not provide insurance in other than convertible currency

To read the full obligation of the seller and the buyer in CIP Incoterms read the book “ICC Guide to Incoterms 2010”

Other useful links:
5 Essential Notes about: Free On Board (FOB) Incoterms
5 Essential Notes about: Free Carrier (FCA) Incoterms
5 Essential Notes about: Ex Works (EXW) Incoterms
Incoterms: Shipping Guide Every Trader Must Know

نوشته 5 Essential Notes about: CIP Incoterms اولین بار در Shipup Magazine. پدیدار شد.

1. Which party is obliged to pay the local charges (THC, BL fee, …) in Free On Board (FOB)?

– All the charges in origin is for the account of the seller. So the seller must pay all the local charges in the port of load. Local charges are Terminal Handling Charges (THC), Bill of lading fee, Load Off Load On(LOLO) charges and so on.

2. What if the differences between FOB and CFR?

– As you well know, the only difference between the FOB and CFR are the cost of the ocean freight. In FOB the buyer will make the contract of the carriage and pay the ocean freight from to the port of destination. In CFR the seller has to pay the freight to the carrier.

3. Is the Free On Board (FOB) preferable to Cost and Freight (CFR)?

– It depends on some factors like total freight of the shipment, risk of the shipment and possibility to find competitive freight rate.
– If total freight of your shipment is considerable, it is advisable for the buyer to use the FOB term. Because in FOB term the buyer pay the freight charges after the arrival the goods at the final destination.
– If the risk of shipment is high like reefer shipments, it is highly better for the buyer to make the contract of the carriage. As in both CFR and FOB the buyer bears all risks of shipment after loading on board, they are likely to make more accurate contract of carriage.
– If the seller can find better freight rate, it is advisable to use CFR or CIF term instead of FOB.

4. What are other costs that the seller is obliged to pay?

– In addition to local charges mentioned in question 2, there might be other charges in export country. Document fees, Entry Summary Declaration (ENS), Licence fee, Customs clearance, Transport costs, Telex release and Any other local charges.

5. What is Free On Board or “FOB Destination”?

– FOB destination means that the title for the goods transfers to the buyer upon delivery at the destination port. Although ocean freight will be paid by the buyer, the seller is responsible if anything happens to the goods during the journey to the destination port.

To read the full obligation of the seller and the buyer in FOB Incoterms read the book “ICC Guide to Incoterms 2010”

Other useful links:
5 Essential Notes about: Free Carrier (FCA) Incoterms
5 Essential Notes about: Ex Works (EXW) Incoterms
Incoterms: Shipping Guide Every Trader Must Know

نوشته 5 Essential Notes about: Free On Board (FOB) Incoterms اولین بار در Shipup Magazine. پدیدار شد.

1. What is the main differences between Free Carrier (FCA) and Ex Works (EXW)?

– There are two main differences. The first one is that in FCA the seller is obliged to clear the goods for export, at its own costs and risks. The second difference is about the loading the goods on collecting vehicle.

2. Should the delivery place be specified in Free Carrier (FCA)?

– It is highly advisable to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.
– If no specific point is specified, the seller may select the point that best suits to deliver.

3. Is the seller responsible for loading goods at any named place?

– No. It depends on the named place for delivery as below:
a) if the named place is the seller’s premises, the seller must loads the goods on the means of transport provided by the buyer.
b) In any other case, the seller must place the goods at the disposal of the carrier or another person nominated by the buyer on the means of transport ready for unloading.

4. How the risk of the shipment is transferred in  Free Carrier (FCA)?

– The buyer bears all risks of loss of or damage to the goods from the time they have been delivered.
– If  a) the buyer fails to notify the nomination of a carrier or another person or to give notice to the seller;
or b) the carrier or person nominated by the buyer  fails to take the goods into its charge, then, the buyer bears all risks of loss of or damage to the goods:
(i) from the agreed date, or in the absence of an agreed date,
(ii) from the date notified by the seller  within the agreed period; or, if no such date has been notified,
(iii) from the expiry date of any agreed period for delivery,
“provided that the goods have been clearly identified as the contract goods”.

5. How and When the Buyer must notice the seller?

– The buyer must notify the seller of:
a) the name of the carrier or another person nominated  within sufficient time as to enable the seller to deliver the goods in accordance with that article;
b) where necessary, the selected time within the period agreed for delivery when the carrier or person nominated will take the goods;
c) the mode of transport to be used by the person nominated; and
d) the point of taking delivery within the named place.

To read the full obligation of the seller and the buyer in FCA Incoterms read the book “ICC Guide to Incoterms 2010”

Other useful links:
Incoterms: Shipping Guide Every Trader Must Know

نوشته 5 Essential Notes about: Free Carrier (FCA) Incoterms اولین بار در Shipup Magazine. پدیدار شد.