CHAPTER 4 INTERCOMS

JABATAN PERDAGANGAN
DPL40053 EXPORT IMPORT DOCUMENTATION AND

PROCEDURES
SESSION 1 2022/2023
ASSIGNMENT: E-BOOK

PREPARED BY:







NO. GROUP
ID MEMBERS




02DLS20F2044 MUHAMAD FAZLI BIN

MOHD NASIR




02DLS20F2031 MUHAMMAD NABIL
FAREEZ BIN MOHD ROSLI




02DLS20F2033 MUHAMMAD ABDUL
BASRI BIN MOHD RODHI

DLS 4B

SUBMISSON FOR :
PUAN NORHUDAYA BINTI MASROM

DATE :
4 NOVEMBER 2022

EXPORT IMPORT
DOCUMENT AND

PROCEDURES
DPL40053

CHAPTER 4

INCOTERMS

MUHAMMAD NABIL FAREEZ
BIN MOHD ROSLI
02DLS20F2031

MUHAMAD FAZLI BIN MOHD
NASIR

02DLS20F2044
MUHAMMAD ABDUL BASRI BIN

MOHD RODHI
02DLS20F2033

CONTENTS

INTRODUCTION




HISTORY
PAGE 1

PAGE 2-7





OBJECTIVE& E, F, C, D
IMPORTANCE TERMS



PAGE 9
PAGE 8

DIFFERENCE BETWEEN
INCOTERMS

2000&INCOTERMS 2010
UNDER FOB
REGULATION


PAGE 10-11

To facilitate commerce around the world, the
International Chamber of Commerce (ICC) publishes
a set of Incoterms, officially known as international
commercial terms. Globally recognized, Incoterms

prevent confusion in foreign trade contracts by
clarifying the obligations of buyers and sellers.

Parties involved in domestic and international trade
commonly use them as a kind of shorthand to help
understand one another and the exact terms of their
business arrangements. Some Incoterms apply to
any means of transportation; others apply strictly to

transportation across water.

1

HISTORY

Incoterms were first conceived by the ICC in 1921,
and the first Incoterms rules were created in 1936.
They were officially designated as Incoterms in 1936.
Since then, Incoterms have evolved into a codified

worldwide contractual standard. They are
periodically updated when international trade

events require attention

1923: first interest of the ICC for commercial
terms

After the creation of the ICC in 1919, one of his first initiatives was
to facilitate international trade operations. At the beginning of the
1920s, the global organization of companies began to understand
the commercial terms used by operators. This was accomplished

through a study limited to six terms commonly used in just 13
countries. The results were published in 1923, highlighting
disparities in interpretation.

2

1928: clarity improved

To examine the differences in interpretation
identified in the initial survey, a second study was
conducted. This time, the scope was extended to

the interpretation of commercial terms used in
over 30 countries.




1936: global guidelines for international trade
operators

Based on the results of the
studies, the first version of

the Incoterms rules was
published. The terms

included FAS, FOB, C&F,
CIF, Ex Ship and Ex Quay.

3

1953: increase in rail transport

Due to the Second World War,
further revisions to the Incoterms

standards were suspended and
never resumed until the 1950s. The

first revision of the Incoterms
standards was therefore published
in 1953. Three new terms for non-
maritime transport were introduced.

The new rules included DCP
(Delivered Costs Paid), FOR (Free on

Rail) and FOT (Free on Truck).

1967: correction of
interpretation errors

ICC launched the third revision
of Incoterms, to eliminate the

misinterpretations of the
previous version. Two new terms
DAF (Delivered at Frontier) and
DDP (Delivery Duties Paid) were

added.

4

1974: growth of air transport

The growing use of air transport required a
new revision of the terms. The new edition
reported the new term FOB Airport (Free On
board Airport). The purpose of this term was
to eliminate confusion with respect to the

maritime term FOB (Free on Board).

1980: development of container
traffic

With the expansion of freight
transport in containers, the
need for another overhaul
was felt. With this edition the

term FRC (Free Carrier ...
Named at Point) was

introduced, which indicated
goods not received

“alongside ship”, but in an
internal point, as in a
container-yard..

5

1990: a complete overhaul

The fifth revision has simplified and optimized the so- called
Free-Carrier terms by eliminating the terms for each type of

transport (FOR-Free on Rail, FOT-Free on Truck and FOB
Airport-Free on board Airport), considering it sufficient to
use the generic term FCA (Free Carrier ... at Named Point).

2000: modification of customs clearance
obligations

Optimization of customs aspects in terms of FAS
and DEQ.

6

2010: reflections on the contemporary
commercial landscape

The 2010 revision allowed the optimization of the so-called
“D-rules“, with the elimination of the terms DAF (Delivered at

Frontier), DES (Delivered Ex Ship), DEQ (Delivered Ex Quay)
and DDU (Delivered Duty Unpaid) and with the addition of
the terms DAT (Delivered at Terminal) and DAP (Delivered at

Place). There were also changes in the so-called “String-
sales”

2020: further simplification and more
freedom to the parties

The newly-published 2020 revision substituted the term DAT (Delivered
at Terminal) with DPU (Delivered at Place Unloaded), essentially leaving

the parties with more room to negotiate the point of delivery under
Incoterms rules. Additionally, CIP (Carriage and Insurance Paid To) has
been modified, so that the minimum insurance coverage is set according
to Clause (A) Institute Cargo Clauses instead of (C), which remains for

CIF (Cost, Insurance and Freight).

7

OBJECTIVE

Eliminate barriers caused by distance, language,
and local business practices
Eliminate uncertainties and different
interpretations of trade terms on a world-wide
scale
Provide universally accepted vocabulary
Reduce risk of misunderstanding, disputes, and
litigation
Facilitate international commercial exchanges
Define the importer’s and exporter’s costs, risk and
obligations regarding delivery of the goods

IMPORTANCE

Both will know their responsibilities well
Know the charge bear by both parties
Control the amount of fees being charged
Control and reduce risks of transferring product
Helps in fixed the selling pricemore reliable

8

“E” term
Seller m
akes the goods available to the buyer at

the seller’s premises or other place named by the
seller

“F” terms

Seller is responsible to deliver the goods to the
export shipment point and carrier designated by the
buyer

“C” terms

Seller is responsible for contracting carriage of
goods to the place of destination, but does not
assume risk of loss or damage to goods, or
additional costs due to events occurring after
shipment

“D” terms

Seller is responsible for all costs and risks
associated with delivering goods to the named
place in the country of destination

9

Difference INCOTERMS 2000 and
INCOTERMS 2010 under FOB
regulation

INCOTERMS 2000 INCOTERMS 2010

Means that the seller delivers when The seller clears the goods for export
the goods from that pass the ship's and ensures they are delivered to
rail at the named port of shipment. and loaded onto the vessel for
This means that the buyer has to transport at the named port of
bear all costs and risks of loss of or departure.
damage to the goods from that The buyer takes over risk and costs,
point. including import clearance and
The FOB term requires the seller to duties, as soon as the goods are
clear the goods for export. This term loaded onto the transport vessel at
can be used only for sea or inland the transport vessel at the port of
waterway transport. departure.
If the parties do not intend to FOB only applies to ocean or inland
deliver the goods across the ship's waterway transport.
rail, the FCA term should be used. Seller pays all costs up to main
carriage, then buyer takes over all
cost responsibility.

10

INCOTERMS 2000 INCOTERMS 2010

Seller's obligations: Seller's obligations:
Warehouse loading. Goods, commercial invoice and
Export Customs Duty documentation
Transport to port loading. Export packaging and marking.
Unload from truck at port. of Export licenses and customs
origin. formalities.
Landing on vessel at origin's Pre-carriage and delivery.
port. Loading charges.
Delivery onboard vessel at
named port of shipment.
Proof of delivery.
Cost of pre-shipment inspection.

Buyer's obligations: Buyer's obligations:
Air, Ocean, Freight. Payment for goods as specified
Unload from vessel at destination. in sales contract.
Load onto truck from the importers' Main carriage.
port. Discharge and to onward
Transport destination. carriage
Insurance. Import formalitiesand duties.
Cost of pre-shipment inspection.
Entry-customs clearance.

11