Incoterms: A Guide to International Trade Terms
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Incoterms: Understanding Responsibility and Risk in International Trade
Ex Works (EXW)
- Buyer assumes full responsibility, including loading goods onto their chosen carrier without seller assistance.
- Buyer bears all risks and costs associated with loading and transportation.
- Seller has no obligation to load goods, but if they do, it's at the buyer's risk.
- Buyer has maximum responsibility.
Free Carrier (FCA)
- Seller loads goods onto the buyer's chosen carrier at a specified location.
- Seller's responsibility ends after loading. Buyer handles transportation and associated costs.
- Seller is responsible for export clearance.
Free Alongside Ship (FAS)
- Seller handles inland transportation to the port and places goods alongside the ship, cleared for export.
- Buyer is responsible for international transportation, loading onto the vessel, and all subsequent costs.
Free On Board (FOB)
- Seller covers all costs to deliver goods on board the ship at the port of origin.
- Buyer's responsibility begins once goods are loaded, including international transportation and associated costs (transport, taxes, import clearance).
Cost and Freight (CFR)
- Seller places goods on board and pays for international transportation to the destination port, cleared for export.
- Buyer assumes responsibility and risk once goods are loaded, including transportation from the destination port.
- Insurance is not included.
Cost, Insurance, and Freight (CIF)
- Seller handles loading, international transportation, and insurance to the destination port.
- Buyer is responsible for transportation from the destination port.
- Similar to CFR, but with the seller providing insurance.
Carriage Paid To (CPT)
- Seller arranges and pays for carriage to a named destination.
- Buyer's responsibility starts upon loading, including insurance costs.
Carriage and Insurance Paid to (CIP)
- Seller handles loading, transportation, and insurance to a named destination.
- Buyer is responsible for transportation from the specified destination point.
Delivered At Terminal (DAT)
- Seller arranges transportation and delivers goods, unloaded, at a named terminal.
- Risk transfers to the buyer upon unloading.
- Buyer handles import clearance, local taxes, and import duties.
Delivered At Place (DAP)
- Seller arranges carriage and delivers goods at a named place without unloading.
- Unloading and associated risks are the buyer's responsibility.
- Buyer handles import clearance.
Delivered Duty Paid (DDP)
- Seller assumes maximum responsibility, including carriage, delivery to a named place, import clearance, and payment of taxes/duties.
- Consider potential complexities and delays in import clearance procedures in certain countries.