Frequently Asked Questions

  1. INCOTERMS

    What are Incoterms?
    INCOTERMS are a set of three-letter standard trade terms most commonly used in international contracts for the sale of goods. It is essential that you are aware of your terms of trade prior to shipment.

    1incotermsEX Works EXW
    EX Works EXW named place Incoterms® 2010 – This term may be used for either domestic or international trade.

    2incotermsFree Carrier FCA
    Free Carrier FCA named place Incoterms® 2010 – This term may be used whatever mode or modes of transport will be used.

    3incotermsCarriage Paid To CPT
    Carriage Paid To CPT named place Incoterms® 2010 – This term may be used whatever mode or modes of transport will be used.

    5incotermsCarriage and Insurance Paid CIP
    Carriage and Insurance Paid CIP to named place Incoterms® 2010 – This term may be used whatever mode or modes of transport will be used.

    5incotermsDelivered at Terminal DAT
    Delivered at Terminal DAT named place Incoterms® 2010 – This term may be used regardless of the mode or modes of carriage to be used.

    6incotermsDelivered at Place DAP
    Delivered at Place DAP named place Incoterms® 2010 – This term may be used whatever mode or modes of transport will be used.

    7incotermsDelivered Duty Paid DDP
    Delivered Duty Paid DDP named place of destination Incoterms® 2010 – This term may be used whatever mode or modes of transport may be used.

    8incotermsFree Alongside Ship FAS
    Terms for sea and inland waterways
    Free Alongside Ship FAS named port of shipment Incoterms® 2010 – The seller delivers the goods when they are placed (on a quay or a barge) alongside the vessel nominated by the buyer at the named port of shipment.

    9incotermsFree on Board FOB
    Terms for sea and inland waterways
    Free On Board FOB named port of shipment Incoterms® 2010 – There is a significant change from the meaning of this term in former revisions of Incoterms: transfer of risk does not happen at the moment when goods cross the ship’s rail.

    10incotermsCost and Freight CFR
    Terms for sea and inland waterways
    Cost and Freight CFR named port of destination Incoterms® 2010 – This rule is intended for use only when carriage is by sea or inland waterway.

    11incotermsCost Insurance and Freight CIF
    Terms for sea and inland waterways
    Cost Insurance and Freight CIF named port of destination Incoterms® 2010 – This term is to be used only when carriage is by sea or inland waterway.

  2. COMMON MISTAKES ON INCOTERMS

    Ten common mistakes in using the Incoterms rules
    Here are some of the most common mistakes made by importers and exporters:

    1. Use of a traditional “sea and inland waterway only” rule such as FOB or CIF for containerised goods, instead of the “all transport modes” rule e.g. FCA or CIP. This exposes the exporter to unnecessary risks. A dramatic recent example was the Japanese tsunami in March 2011, which wrecked the Sendai container terminal. Many hundreds of consignments awaiting despatch were damaged. Exporters who were using the wrong rule found themselves responsible for losses that could have been avoided!
    2. Making assumptions about passing of title to the goods, based on the Incoterms rule in use. The Incoterms rules are silent on when title passes from seller to buyer; this needs to be defined separately in the sales contract.
    3. Failure to specify the port/place with sufficient precision, e.g. “FCA Chicago”, which could refer to many places within a wide area.
    4. Attempting to use DDP without thinking through whether the seller can undertake all the necessary formalities in the buyer’s country, e.g. paying GST or VAT.
    5. Attempting to use EXW without thinking through the implications of the buyer being required to complete export procedures – in many countries it will be necessary for the exporter to communicate with the authorities in a number of different ways.
    6. Use of CIP or CIF without checking whether the level of insurance in force matches the requirements of the commercial contract – these Incoterms rules only require a minimal level of cover, which may be inadequate.
    7. Where there is more than one carrier, failure to think through the implications of the risk transferring on taking in charge by the first carrier – from the buyer’s perspective, this may turn out to be a small haulage company in another country, so redress may be difficult in the event of loss or damage.
    8. Failure to establish how terminal handling charges (THC) are going to be treated at the point of arrival. Carriers’ practices vary a good deal here. Some carriers absorb THC’s and include them in their freight charges; however others do not.
    9. Where payment is with a letter of credit or a documentary collection, failure to align the Incoterms rule with the security requirements or the requirements of the banks.
    10. When DAT or DAP is used with a “post-clearance” delivery point, failure to think through the liaison required between the carrier and the customs authorities – can lead to delays and extra costs.
  3. IATA CONDTIONS

    RESOLUTION 600b∗
    AIR WAYBILL – CONDITIONS OF CONTRACT
    CSC(32) 600b  / Expiry: Indefinite / Type: B

    RESOLVED that:
    The following Conditions of Contract and Notices be included on an Air Waybill1.

    I. NOTICE APPEARING ON THE FACE OF THE AIR WAYBILL
    It is agreed that the goods described herein are accepted in apparent good order and condition (except as noted) for carriage SUBJECT TO THE CONDITIONS OF CONTRACT ON THE REVERSE HEREOF. ALL GOODS MAY BE CARRIED BY ANY OTHER MEANS INCLUDING ROAD OR ANY OTHER CARRIER UNLESS SPECIFIC CONTRARY INSTRUCTIONS ARE GIVEN HEREON BY THE SHIPPER, AND SHIPPER AGREES THAT THE SHIPMENT MAY BE CARRIED VIA INTERMEDIATE STOPPING PLACES WHICH THE CARRIER DEEMS APPROPRIATE. THE SHIPPER’S ATTENTION IS DRAWN TO THE NOTICE CONCERNING CARRIER’S LIMITATION OF LIABILITY. Shipper may increase such limitation of liability by declaring a higher value for carriage and paying a supplemental chargeif required.

    II. CONDITIONS OF CONTRACT ON REVERSE SIDE OF THE AIR WAYBILL
    NOTICE CONCERNING CARRIER’S LIMITATION OF LIABILITY
    If the carriage involves an ultimate destination or stop in a country other than the country of departure, the Montreal Convention or the Warsaw Convention may be applicable to the liability of the Carrier in respect of loss of, damage or delay to cargo. Carrier’s limitation of liability in accordance with those Conventions shall be as set forth in subparagraph 4 unless a higher value is declared.

    ∗ This Resolution is in the hands of all IATA Cargo Agents.
    1 In order to ensure consistency with any future changes in liability limits for loss of, damage, or delay to
    cargo under Article 24 of the Montreal Convention, the IATA Secretariat is authorized to conform the
    provisions of this Resolution 600b (and any other affected Cargo Services Conference Resolutions or
    Recommended Practices) to such changes without further Conference action. Conforming changes
    shall take effect on the date specified in written notice to Members by the IATA Secretariat which shall
    include a copy of the revised Resolution.

    CONDITIONS OF CONTRACT
    1. In this contract and the Notices appearing hereon:
    CARRIER includes the air carrier issuing this air waybill and all carriers that carry or undertake to carry the cargo or perform any other services related to such carriage.

    SPECIAL DRAWING RIGHT (SDR) is a Special Drawing Right as defined by the International
    Monetary Fund.

    WARSAW CONVENTION means whichever of the following instruments is applicable to the
    contract of carriage:

    the Convention for the Unification of Certain Rules Relating to International Carriage by Air,
    signed at Warsaw, 12 October 1929;

    that Convention as amended at The Hague on 28 September 1955;

    that Convention as amended at The Hague 1955 and by Montreal Protocol No. 1, 2, or 4 (1975) as the case may be.

    MONTREAL CONVENTION means the Convention for the Unification of Certain Rules for International Carriage by Air, done at Montreal on 28 May 1999.

    2./2.1 Carriage is subject to the rules relating to liability established by the Warsaw Convention or the Montreal Convention unless such carriage is not “international carriage” as defined by the applicable Conventions.

    2.2 To the extent not in conflict with the foregoing, carriage and other related services performed by each Carrier are subject to:

    2.2.1 applicable laws and government regulations;

    2.2.2 provisions contained in the air waybill, Carrier’s conditions of carriage and related rules, regulations, and timetables (but not the times of departure and arrival stated therein) and applicable tariffs of such Carrier, which are made part hereof, and which may be inspected at any airports or other cargo sales offices from which it operates regular services. When carriage is to/from the USA, the shipper and the consignee are entitled, upon request, to receive a free copy of the Carrier’s conditions of carriage. The Carrier’s conditions of carriage include, but are not limited to:

    2.2.2.1 limits on the Carrier’s liability for loss, damage or delay of goods, including fragile or perishable goods;

    2.2.2.2 claims restrictions, including time periods within which shippers or consignees must file a claim or bring an action against the Carrier for its acts or omissions, or those of its agents;

    2.2.2.3 rights, if any, of the Carrier to change the terms of the contract;

    2.2.2.4 rules about Carrier’s right to refuse to carry;

    2.2.2.5 rights of the Carrier and limitations concerning delay or failure to perform service, including schedule changes, substitution of alternate Carrier or aircraft and rerouting.

    3. The agreed stopping places (which may be altered by Carrier in case of necessity) are those places, except the place of departure and place of destination, set forth on the face hereof or shown in Carrier’s timetables as scheduled stopping places for the route. Carriage to be performed hereunder by several successive Carriers is regarded as a single operation.

    4. For carriage to which the Montreal Convention does not apply, Carrier’s liability limitation for cargo lost, damaged or delayed shall be 19 SDRs per kilogram unless a greater per kilogram monetary limit is provided in any applicable Convention or in Carrier’s tariffs or general conditions of carriage.

    5./5.1 Except when the Carrier has extended credit to the consignee without the written consent of the shipper, the shipper guarantees payment of all charges for the carriage due in accordance with Carrier’s tariff, conditions of carriage and related regulations, applicable laws (including national laws implementing the Warsaw Convention and the Montreal Convention), government regulations, orders and requirements.

    5.2 When no part of the consignment is delivered, a claim with respect to such consignment will be considered even though transportation charges thereon are unpaid.

    6./6.1 For cargo accepted for carriage, the Warsaw Convention and the Montreal Convention permit shipper to increase the limitation of liability by declaring a higher value for carriage and paying a supplemental charge if required.

    6.2 In carriage to which neither the Warsaw Convention nor the Montreal Convention applies Carrier shall, in accordance with the procedures set forth in its general conditions of carriage and applicable tariffs, permit shipper to increase the limitation of liability by declaring a higher value for carriage and paying a supplemental charge if so required.

    7./7.1 In cases of loss of, damage or delay to part of the cargo, the weight to be taken into account in determining Carrier’s limit of liability shall be only the weight of the package or packages concerned.

    7.2 Notwithstanding any other provisions, for “foreign air transportation” as defined by the U.S. Transportation Code:

    7.2.1 in the case of loss of, damage or delay to a shipment, the weight to be used in determining Carrier’s limit of liability shall be the weight which is used to determine the charge for carriage of such shipment; and

    7.2.2 in the case of loss of, damage or delay to a part of a shipment, the shipment weight in

    7.2.1 shall be prorated to the packages covered by the same air waybill whose value is affected by the loss, damage or delay. The weight applicable in the case of loss or damage to one or more articles in a package shall be the weight of the entire package.

    8. Any exclusion or limitation of liability applicable to Carrier shall apply to Carrier’s agents, employees, and representatives and to any person whose aircraft or equipment is used by Carrier for carriage and such person’s agents, employees and representatives.

    9. Carrier undertakes to complete the carriage with reasonable dispatch. Where permitted by applicable laws, tariffs and government regulations, Carrier may use alternative carriers, aircraft or modes of transport without notice but with due regard to the interests of the shipper. Carrier is authorized by the shipper to select the routing and all intermediate stopping places that it deems appropriate or to change or deviate from the routing shown on the face hereof.

    10. Receipt by the person entitled to delivery of the cargo without complaint shall be prima facie evidence that the cargo has been delivered in good condition and in accordance with the contract of carriage.

    10.1 In the case of loss of, damage or delay to cargo a written complaint must be made to Carrier by the person entitled to delivery. Such complaint must be made:

    10.1.1 in the case of damage to the cargo, immediately after discovery of the damage and at the latest within 14 days from the date of receipt of the cargo;

    10.1.2 in the case of delay, within 21 days from the date on which the cargo was placed at the disposal of the person entitled to delivery.

    10.1.3 in the case of non-delivery of the cargo, within 120 days from the date of issue of the air waybill, or if an air waybill has not been issued, within 120 days from the date of receipt of the cargo for transportation by the Carrier.

    10.2 Such complaint may be made to the Carrier whose air waybill was used, or to the first Carrier or to the last Carrier or to the Carrier, which performed the carriage during which the loss, damage or delay took place.

    10.3 Unless a written complaint is made within the time limits specified in 10.1 no action may be brought against Carrier.

    10.4 Any rights to damages against Carrier shall be extinguished unless an action is brought within two years from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.

    11. Shipper shall comply with all applicable laws and government regulations of any country to or from which the cargo may be carried, including those relating to the packing, carriage or delivery of the cargo, and shall furnish such information and attach such documents to the air waybill as may be necessary to comply with such laws and regulations. Carrier is not liable to shipper and shipper shall indemnify Carrier for loss or expense due to shipper’s failure to comply with this provision.

    12. No agent, employee or representative of Carrier has authority to alter, modify or waive any provisions of this contract.

  4. AIRWAY BILL CONDITIONS

    RESOLUTION 600b∗
    AIR WAYBILL – CONDITIONS OF CONTRACT
    CSC(32) 600b  / Expiry: Indefinite / Type: B

    RESOLVED that:
    The following Conditions of Contract and Notices be included on an Air Waybill1.

    I. NOTICE APPEARING ON THE FACE OF THE AIR WAYBILL
    It is agreed that the goods described herein are accepted in apparent good order and condition (except as noted) for carriage SUBJECT TO THE CONDITIONS OF CONTRACT ON THE REVERSE HEREOF. ALL GOODS MAY BE CARRIED BY ANY OTHER MEANS INCLUDING ROAD OR ANY OTHER CARRIER UNLESS SPECIFIC CONTRARY INSTRUCTIONS ARE GIVEN HEREON BY THE SHIPPER, AND SHIPPER AGREES THAT THE SHIPMENT MAY BE CARRIED VIA INTERMEDIATE STOPPING PLACES WHICH THE CARRIER DEEMS APPROPRIATE. THE SHIPPER’S ATTENTION IS DRAWN TO THE NOTICE CONCERNING CARRIER’S LIMITATION OF LIABILITY. Shipper may increase such limitation of liability by declaring a higher value for carriage and paying a supplemental chargeif required.

    II. CONDITIONS OF CONTRACT ON REVERSE SIDE OF THE AIR WAYBILL
    NOTICE CONCERNING CARRIER’S LIMITATION OF LIABILITY
    If the carriage involves an ultimate destination or stop in a country other than the country of departure, the Montreal Convention or the Warsaw Convention may be applicable to the liability of the Carrier in respect of loss of, damage or delay to cargo. Carrier’s limitation of liability in accordance with those Conventions shall be as set forth in subparagraph 4 unless a higher value is declared.

    ∗ This Resolution is in the hands of all IATA Cargo Agents.
    1 In order to ensure consistency with any future changes in liability limits for loss of, damage, or delay to
    cargo under Article 24 of the Montreal Convention, the IATA Secretariat is authorized to conform the
    provisions of this Resolution 600b (and any other affected Cargo Services Conference Resolutions or
    Recommended Practices) to such changes without further Conference action. Conforming changes
    shall take effect on the date specified in written notice to Members by the IATA Secretariat which shall
    include a copy of the revised Resolution.

    CONDITIONS OF CONTRACT
    1. In this contract and the Notices appearing hereon:
    CARRIER includes the air carrier issuing this air waybill and all carriers that carry or undertake to carry the cargo or perform any other services related to such carriage.

    SPECIAL DRAWING RIGHT (SDR) is a Special Drawing Right as defined by the International
    Monetary Fund.

    WARSAW CONVENTION means whichever of the following instruments is applicable to the
    contract of carriage:

    the Convention for the Unification of Certain Rules Relating to International Carriage by Air,
    signed at Warsaw, 12 October 1929;

    that Convention as amended at The Hague on 28 September 1955;

    that Convention as amended at The Hague 1955 and by Montreal Protocol No. 1, 2, or 4 (1975) as the case may be.

    MONTREAL CONVENTION means the Convention for the Unification of Certain Rules for International Carriage by Air, done at Montreal on 28 May 1999.

    2./2.1 Carriage is subject to the rules relating to liability established by the Warsaw Convention or the Montreal Convention unless such carriage is not “international carriage” as defined by the applicable Conventions.

    2.2 To the extent not in conflict with the foregoing, carriage and other related services performed by each Carrier are subject to:

    2.2.1 applicable laws and government regulations;

    2.2.2 provisions contained in the air waybill, Carrier’s conditions of carriage and related rules, regulations, and timetables (but not the times of departure and arrival stated therein) and applicable tariffs of such Carrier, which are made part hereof, and which may be inspected at any airports or other cargo sales offices from which it operates regular services. When carriage is to/from the USA, the shipper and the consignee are entitled, upon request, to receive a free copy of the Carrier’s conditions of carriage. The Carrier’s conditions of carriage include, but are not limited to:

    2.2.2.1 limits on the Carrier’s liability for loss, damage or delay of goods, including fragile or perishable goods;

    2.2.2.2 claims restrictions, including time periods within which shippers or consignees must file a claim or bring an action against the Carrier for its acts or omissions, or those of its agents;

    2.2.2.3 rights, if any, of the Carrier to change the terms of the contract;

    2.2.2.4 rules about Carrier’s right to refuse to carry;

    2.2.2.5 rights of the Carrier and limitations concerning delay or failure to perform service, including schedule changes, substitution of alternate Carrier or aircraft and rerouting.

    3. The agreed stopping places (which may be altered by Carrier in case of necessity) are those places, except the place of departure and place of destination, set forth on the face hereof or shown in Carrier’s timetables as scheduled stopping places for the route. Carriage to be performed hereunder by several successive Carriers is regarded as a single operation.

    4. For carriage to which the Montreal Convention does not apply, Carrier’s liability limitation for cargo lost, damaged or delayed shall be 19 SDRs per kilogram unless a greater per kilogram monetary limit is provided in any applicable Convention or in Carrier’s tariffs or general conditions of carriage.

    5./5.1 Except when the Carrier has extended credit to the consignee without the written consent of the shipper, the shipper guarantees payment of all charges for the carriage due in accordance with Carrier’s tariff, conditions of carriage and related regulations, applicable laws (including national laws implementing the Warsaw Convention and the Montreal Convention), government regulations, orders and requirements.

    5.2 When no part of the consignment is delivered, a claim with respect to such consignment will be considered even though transportation charges thereon are unpaid.

    6./6.1 For cargo accepted for carriage, the Warsaw Convention and the Montreal Convention permit shipper to increase the limitation of liability by declaring a higher value for carriage and paying a supplemental charge if required.

    6.2 In carriage to which neither the Warsaw Convention nor the Montreal Convention applies Carrier shall, in accordance with the procedures set forth in its general conditions of carriage and applicable tariffs, permit shipper to increase the limitation of liability by declaring a higher value for carriage and paying a supplemental charge if so required.

    7./7.1 In cases of loss of, damage or delay to part of the cargo, the weight to be taken into account in determining Carrier’s limit of liability shall be only the weight of the package or packages concerned.

    7.2 Notwithstanding any other provisions, for “foreign air transportation” as defined by the U.S. Transportation Code:

    7.2.1 in the case of loss of, damage or delay to a shipment, the weight to be used in determining Carrier’s limit of liability shall be the weight which is used to determine the charge for carriage of such shipment; and

    7.2.2 in the case of loss of, damage or delay to a part of a shipment, the shipment weight in

    7.2.1 shall be prorated to the packages covered by the same air waybill whose value is affected by the loss, damage or delay. The weight applicable in the case of loss or damage to one or more articles in a package shall be the weight of the entire package.

    8. Any exclusion or limitation of liability applicable to Carrier shall apply to Carrier’s agents, employees, and representatives and to any person whose aircraft or equipment is used by Carrier for carriage and such person’s agents, employees and representatives.

    9. Carrier undertakes to complete the carriage with reasonable dispatch. Where permitted by applicable laws, tariffs and government regulations, Carrier may use alternative carriers, aircraft or modes of transport without notice but with due regard to the interests of the shipper. Carrier is authorized by the shipper to select the routing and all intermediate stopping places that it deems appropriate or to change or deviate from the routing shown on the face hereof.

    10. Receipt by the person entitled to delivery of the cargo without complaint shall be prima facie evidence that the cargo has been delivered in good condition and in accordance with the contract of carriage.

    10.1 In the case of loss of, damage or delay to cargo a written complaint must be made to Carrier by the person entitled to delivery. Such complaint must be made:

    10.1.1 in the case of damage to the cargo, immediately after discovery of the damage and at the latest within 14 days from the date of receipt of the cargo;

    10.1.2 in the case of delay, within 21 days from the date on which the cargo was placed at the disposal of the person entitled to delivery.

    10.1.3 in the case of non-delivery of the cargo, within 120 days from the date of issue of the air waybill, or if an air waybill has not been issued, within 120 days from the date of receipt of the cargo for transportation by the Carrier.

    10.2 Such complaint may be made to the Carrier whose air waybill was used, or to the first Carrier or to the last Carrier or to the Carrier, which performed the carriage during which the loss, damage or delay took place.

    10.3 Unless a written complaint is made within the time limits specified in 10.1 no action may be brought against Carrier.

    10.4 Any rights to damages against Carrier shall be extinguished unless an action is brought within two years from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.

    11. Shipper shall comply with all applicable laws and government regulations of any country to or from which the cargo may be carried, including those relating to the packing, carriage or delivery of the cargo, and shall furnish such information and attach such documents to the air waybill as may be necessary to comply with such laws and regulations. Carrier is not liable to shipper and shipper shall indemnify Carrier for loss or expense due to shipper’s failure to comply with this provision.

    12. No agent, employee or representative of Carrier has authority to alter, modify or waive any provisions of this contract.