INCO TERMS have categorized into 11 terms which name are given below-
1 - CFR (Cost & Freight) in Short suppose CFR Air Port, Means Seller will bear the dispatch cost and dispatch the shipment to the respective air port and buyer will responsible for arrange the clearance.
Do you know you have 4 to 5 working days for clearance if you delay more than given time you have to pay the penalty as per their rules.
2 - CIF (Cost Insurance & Freight) In short suppose CIF Mumbai Airport, Means all terms will be same as per CFR but here Seller also responsible for insurance till the Mumbai airport.
3 - CIP (Carriage Insurance Paid) In short suppose CIP Mumbai airport , Means Seller also responsible for unloading the shipment at Airport or Sea Port, Commonly used for big shipment via sea. Also seller have to share the commercial invoices, packaging list. Buyer will responsible for the clearance and duty.
4 - CPT (Carrier Paid To (Place) In short suppose CPT Mumbai Airport, Means all terms will be same as per CIP but Insurance and unloading at port on buyer scope.
5 - DAP (Delivered At Place) As the name is indicated delivered at place means (DAP Mumbai Airport/ Sea Port) Seller is responsible for every process except Clearance and Import Duty in buyer scope.
6 - DAT (Delivered At Terminal or Port) DAT MUMBAI PORT, means buyer will responsible for Unloading, Import Duty, taxes and Clearance rest all comes under seller scope.
7 - DDP (Delivered Duty Paid), DDP is the only terms in shipping that all shipment process come to seller's scope until shipment get delivered at customer place.
8 - Ex-Works, Ex works completely opposite of DDP, Means seller only packed the shipment at their country buyer have to pick up the material from there. In this terms all responsibility comes under buyer scope for shipping.
9 - FAS (Free Along Side Ship), This terms only used in sea shipment. Seller responsibility is Warehouse services, Loading from Origin, inland transportation, Forwarders and Customs and terminal charges. Buyer responsibility Loading on vessel, Ocean freight, Insurance, Unloading loading, Transport to destination, custom clearance, import duty and tax.
10 - FCA (Free Carrier (Place)), Seller only packed the shipment and loading the carrier truck, Rest all comes under buyer scope such as air freight, clearance, duty tax and dispatch to destination.
11 - FOB (Free On Board) In this terms Seller bear the warehouse charges, packaging the shipment, load the shipment at respective vessel or truck and dispatch to nearest airport or sea port. Rest all process comes under buyer scope means at the Airport buyer will responsible for export clearance, documentation on respective country, dispatch to the import country, arrange the clearance, bear the duty and tax and dispatch the final destination.
Then What is FOR
As our Topic is FOR, We can see FOR term is not come under Inco Terms. Then what is this.
We often see in India's most buyers uses the FOR terms in their Purchase Order as a delivery terms for local and international transaction. Because in Import export movement or Local movement of shipment well known companies have to mentioned the delivery terms.
Every above mentioned terms have own & unique property we can easily search online but FOR not easy understandable. Because its not traceable.
FOR stand for 'Free On Road". FOR is not the any standard even is not valid internationally. In India many time we seen, they are not follow the SOP and make their own standard which is not valid. I don't know why they discover this terms, But if this terms is currently in used in India so we will tell you its terminology.
Do you know in case of LC (Letter Of Credit) payment terms you can't mentioned the FOR, because its using a secure payment terms so FOR is not valid there. If still buyer want to mention FOR in LC then they also have to mentioned DDP. For example - Delivery terms - FOR/DDP.
Buyer will share his requirement to Seller and request for the quotation. Seller will share quotation with Price.
Buyer can negotiate with price and condition even the lead time.
After when buyer and seller agreed with price and other terms then buyer will raise his Purchase order and he mentioned the Delivery Terms FOR.
For here is FOR means buyer don't want to get in shipment process. He want seller take care of shipping, import clearance. In simple language seller responsibility to delivery that raw material at customer place.
Buyer will pay to seller whatever cost applicable. Now seller will coordinate with the Freight Forwarder or Courier Company. Now Freight forwarder or Courier company will take over the shipment from the buyer and take the export or import clearance process. They will charge their fess as per the shipment size and value.
If you want to comparison of FOR with the Inco terms so DDP (Delivered duty paid) have same property. In DDP shipment all shipment process and clearance will come under Seller scope. You can say the official name of FOR is DDP. Because both follow same terminology but difference is only DDP is a international standard but FOR is not valid as standard.
You can watch below video in Hindi for the same topic for better understanding.
If you want to know about all inco terms please comment us. If you have any query regarding above topic or any suggestion for us so mail us or comment us we will reply the same as soon as possible.
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