Understanding INCOTERMS: A Guide to International Trade

INCOTERMS

Series of predefined commercial terms published by the International Chamber of Commerce intended to communicate the tasks, costs, and risks associated with the transportation and delivery of goods.

EXW:

Places minimum responsibility on the seller, who merely has to make the goods available suitably packaged. The buyer is responsible for loading the goods into a vehicle and all export procedures.

FCA:

Very flexible rule that is suitable for all situations where the buyer arranges the main carriage. The seller is responsible for export clearance. The buyer assumes all risks and costs after the goods have been delivered at the named place.

FAS:

Seller delivers goods, cleared for export, alongside the vessel at a named port. Risk transfers to the buyer, who is responsible for loading the goods and all costs thereafter.

FOB:

Seller delivers goods, cleared for export, loaded on board the vessel at the named port. Risk transfers to the buyer, who bears all costs thereafter.

CFR:

Seller arranges and pays for transport to the named port, covering the cost of freight, duty unpaid. Seller delivers goods, cleared for export, loaded on board the vessel. Risk transfers to the buyer once the goods have been loaded on board.

CIF:

Seller arranges and pays for transport at the named port. Seller delivers goods, cleared for export, loaded on board the vessel. Seller also arranges and pays for insurance and freight for the goods for carriage to the named port. Risk transfers to the buyer once the goods have been loaded on board.

CPT:

The seller is responsible for arranging carriage to the named place but not for insuring the goods. Delivery of the goods takes place, and risk transfers from seller to buyer, at the point where the goods are taken in charge by a carrier.

CIP:

The seller is responsible for arranging carriage to the named place and also for insuring the goods. Delivery of the goods takes place, and risk transfers from the seller to the buyer at the point where the goods are taken in charge by a carrier.

DAT:

The seller is responsible for arranging carriage and for delivering the goods, unloaded from the arriving conveyance, at the named place. Risk transfers from seller to buyer when the goods have been unloaded. The buyer is responsible for import clearance and any applicable local taxes or import duties.

DAP:

The seller is responsible for arranging carriage and for delivering the goods, ready for unloading from the arriving conveyance, at the named place. The buyer is responsible for import clearance and any applicable local taxes or import duties.

DDP:

The seller is responsible for arranging and delivering the goods at the named place, cleared for import and all applicable taxes and duties paid. Risk transfers to the buyer when the goods are made available, ready for unloading from the arriving conveyance.