Friday, November 27, 2009

INCOTERMS In International Trade.

Incoterms is International Commercial Terms designed by the International Chambers of Commerce to share the cost and risk involved in transporting goods from one country to the other between the importer and the exporter. The latest version is INCOTERMS 2000 and it contains 13 INCOTERMS. However, out of these 13 incoterms, only three are often being used in export business in Nigeria. These include;

FOB – Free On Board (named loading port): The classic maritime trade term, seller must load the goods on board the ship nominated by the buyer, cost and risk being divided at ship's rail. The seller must clear the goods for export.

CFR – Cost and Freight (named destination port): seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed the ship's rail

CIF – Cost, Insurance and Freight (named destination port): exactly the same as CFR except that the seller must in addition procure and pay for insurance for the buyer.

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