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Incoterms 2023: Meaning, Chart & List Of Incoterms

INCOTERMS:

Incoterms are an essential tool for global trade as they provide a common set of rules and terms for buyers and sellers to follow, making it easier to negotiate and conduct international trade transactions. These terms help to establish which party is responsible for various aspects of the transaction, including the costs, risks, and responsibilities associated with transporting the goods from the seller to the buyer. By understanding the different Incoterms, businesses can better manage their risk and ensure that their transactions are conducted smoothly and efficiently.

Here’s a comprehensive list of all 11 Incoterms®, categorized by the mode of transport they apply to:

 

Incoterms for any mode of transport:

EXW – Ex Works

FCA – Free Carrier

CPT – Carriage Paid To

CIP – Carriage and Insurance Paid To

DAP – Delivered At Place

DPU – Delivered at Place Unloaded

DDP – Delivered Duty Paid

 

Incoterms for sea and inland waterway transport:

FAS – Free Alongside Ship

FOB – Free on Board

CFR – Cost and Freight

CIF – Cost, Insurance and Freight

Each Incoterm specifies different obligations and responsibilities for the buyer and seller, such as who is responsible for loading and unloading the goods, arranging transportation and insurance, and paying for various costs associated with the shipment. It’s important to choose the most appropriate Incoterm® for your transaction, based on the specific needs and requirements of both parties involved.

To Calculate CBM

To calculate CBM, follow these steps:

  1. Measure the Dimensions:
    • Measure the length, width, and height of the package in meters (m) or cm/100.
    • Ensure that you measure the longest point in each dimension.
  2. Calculate the Volume:
    • Multiply the length, width, and height to get the volume in cubic meters (m³).

For example, if the package measures:

    • Length (L) = 1.2 m
    • Width (W) = 0.8 m
    • Height (H) = 0.6 m

Volume (V) = L x W x H = 1.2 m x 0.8 m x 0.6 m = 0.576 m³

So, the volume of the package is 0.576 cubic meters.

To Calculate Chargeable Weight

To calculate the chargeable weight, follow these steps:

  1. Measure the Dimensions:
    • Measure the length, width, and height of the package in centimeters (cm).
    • Ensure that you measure the longest point in each dimension.
  2. Calculate the Volume:
    • Multiply the length, width, and height to get the volume in cubic centimeters (cm³).

For example, if the package measures:

    • Length (L) = 40 cm
    • Width (W) = 30 cm
    • Height (H) = 20 cm

Volume (V) = L x W x H = 40 cm x 30 cm x 20 cm = 24,000 cm³

  1. Convert Volume to Weight (if necessary):
    • If the shipping company uses a volumetric conversion factor (also known as dimensional weight factor), divide the volume by this factor. This will give you the volumetric weight in kilograms (kg).

For example, if the volumetric conversion factor is 5000 cm³/kg:

Volumetric Weight = Volume / Conversion Factor = 24,000 cm³ / 5000 cm³/kg = 4.8 kg

  1. Compare Actual Weight and Volumetric Weight:
    • Weigh the package on a scale to get the actual weight in kilograms (kg).
  2. Determine the Chargeable Weight:
    • Compare the actual weight and the volumetric weight. The higher of the two will be the chargeable weight.

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