Page 44 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

Unit 2: Methods of Payment and Incoterms

associated in the course of the journey from the exporter country to the importer country. Notes
This is most risky trade term for exporter and more beneficial for importer.
The various types of incoterms are explained as under-outlining of role, responsibilities and
obligations of exporter and importer in a trade deal. Immense care is to be taken in the use of
these incoterms keeping in mind; which mode of transport/carriage will be suitable for the
transportation of the goods to a particular country and region. The various incoterms provide us
the opportunity to choose the best one to be incorporated in international sales contract and
contract of carriage. The detailed explanation of these incoterms is as follows:

Group ‘E’–Departure
1. EXW - Ex Works (named place) (any mode of transport): The exporter shall place the
goods at the disposal of the importer at the premises or any other named place. Such
goods are yet to be cleared for export and are yet to be loaded on any collecting vehicle of
the importer, at his expenses. In this way, EXW Incoterms indicate the minimum
involvement of risks of losses and damages to the exporter and the maximum involvement
of losses and damages to the importer.

Note Under EXW Incoterms; the importer is responsible for all expenses associated with
customs duty clearance, insurance, transportation, documentation work, pre-shipment
inspection, etc. from the factory, warehouse or premises of exporter to his country.
When EXW is used, exporter should remember that:
In this case, the export of the goods is not guaranteed, as the importer may sell the goods
in India or keep them in warehouses for an indefinite period or can resell the cargo in
India to a third party.

In the cases where the exporter is not a manufacturer-exporter, the actual point of delivery
of cargo to the importer may vary from the place where exporter operates his own business.

In certain cases, it has been seen that exporter may have to load the goods on a truck
without charging a loading fee. Although in EXW, payment of loading charges is the duty
of the importer.

Group ‘F’ – Main Carriage not Paid by Seller

1. FCA – Free Carrier (named place): In the FCA shipping term, the exporter is under obligation
to take responsibility of all risks and costs that are involved in trade transactions and
associated with the cargo until the cargo is not delivered to the named place of shipment
and the same has to be collected by the carrier nominated by the importer. Under F Group
of Incoterms, the responsibility of export customs clearance is on the exporter.

Sometimes, under FCA Incoterms the carrier of cargo may have to collect the goods from
the premises of the exporter but he shall bear the cost of delivering the goods up to the
point of port of shipment as agreed in the export sales contract. Sometimes, the exporter’s
premises are the “named place” in the contract. He may have to load the goods onto the
truck but the cost of such loading shall be borne by the importer.
2. FAS – Free Alongside Ship (named port of shipment): FAS Incoterm was previously known
as FOW (Free on Wharf) as per the 1990 version of Incoterms. The exporter is responsible
for delivery of cargo to the named port and place alongside the ship under FAS Incoterms.
It means that preparing export import documents, getting goods inspected and custom

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