Page 47 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes
Figure 2.4: Various Types of Incoterms

This is a very risky shipping term as the exporter provides the services till the doors of importer
and has to bear all the costs and risks in delivering the goods to the importer in importer’s
country.
The incoterms DES and DEQ are used in case of mono-modal trade. It is to be noted that such
incoterms can be used only in cases where the main carriage for shipment of cargo is by sea
freight only.

Applicable Incoterms in Different Modes of Transportation

There are some incoterms that can be used only in case of multi-modal transport and some can
be used only in case of land transportation. Some others can be used when the main carriage of
transport of goods is by sea or inland water only. International traders should take care which
particular incoterm is suitable for conducting the business as such a decision will also be based
on the buyer’s and seller’s bargaining power. Choosing FOB term for a land-locked country
such as Turkmenistan will have serious implications for an exporter, as it will be considered as
a discrepancy in negotiations of documents while recovering the payment through documentary
credit. The table as given below shows the various types of incoterms in relation to the mode of
transport to be used for transporting the cargo to the destined country.

Table 2.6: Applicable Incoterms in Different Modes of Transportation

Air Freight Road Freight Rail Freight Sea Freight
EXW Y Y Y Y
FCA Y Y Y Y
FAS Y
FOB Y
CFR Y
CIF Y
CPT Y Y Y Y
CIP Y Y Y Y
DAF Y Y
DES Y
DEQ Y
DDU Y Y Y Y
DDP Y Y Y Y

42 LOVELY PROFESSIONAL UNIVERSITY