Incoterms is an abbreviation of (International Commercial Terms) which were created by International Trade Office in Paris. Incoterms consist of the most popular formulas which are used in international trade. They were published in 1936 and then updated in 1953, 1967, 1976, 1980, 1990 and 2000. The newest are Incoterms 2011.
The main rules of Incoterms:
- They apply only to the goods, Incoterms cannot be used in international services
- They can be used only when both sides agreed to make business according to them
- All norms, laws used in the contract are more important than Incoterms
- Incoterms cover only trade between seller and buyer, cannot be connected with carrier, banks which gave a loan etc
Incoterms can be divided into loco (means localization) and franco (a form of deliver).
The most popular name of Incoterms:
- fca incoterms
- dap incoterms
- ddu incoterms
- cip incoterms
- cpt incoterms
- ddp incoterms
- fob incoterms
- cfr incoterms
CFR-Cost and Freight
“Cost and Freight” is nothing moe that the case when the person who sales is obliged pay the costs and necessary taxes to bring the goods to the chosen port or point of destination but he still risks of loss of or even damage to the cargo, must even be aware of any additional costs (if such appear) according to unsuspected events occurring after the time the products have been delivered on board the vessel changes from the seller to the client when the goods pass the ship’s board in the port of shipment chosen in the contact.
Incoterm CFR obliges the seller to make sure that the products are clear and rady for export abroad.
Such a incoterm is a very specific because can tak place only for sea and inland waterway transport. Additionaly the ship’s rail serves no practical purpose, e.g. the case of roll-on/roll-off or container transport, the CPT term is more likely to be used and it makes him more safe specially for banks.