Incoterms

Incoterms, or International Commercial Terms, are a set of standardized trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international transactions. These terms specify who is responsible for paying for and managing the shipment, insurance, documentation, customs clearance, and other logistical activities involved in the transportation of goods.

Here are the key Incoterms, along with a brief explanation of each:

Incoterms for Any Mode of Transport

1. EXW (Ex Works):
   • Seller’s Responsibility: Minimal responsibility; makes goods available at their premises.
   • Buyer’s Responsibility: All transportation, insurance, and customs costs from the seller’s premises to the final destination.

1. FCA (Free Carrier):

1. • Seller’s Responsibility: Deliver goods to a carrier or another party nominated by the buyer at the seller’s premises or another named place.
   • Buyer’s Responsibility: Transportation, insurance, and customs costs from the named place.

1. CPT (Carriage Paid To):

1. • Seller’s Responsibility: Pays for carriage to the named place of destination.
   • Buyer’s Responsibility: Risk transfers to the buyer once the goods are handed over to the first carrier.

1. CIP (Carriage and Insurance Paid To):

1. • Seller’s Responsibility: Pays for carriage and insurance to the named place of destination.
   • Buyer’s Responsibility: Risk transfers to the buyer once the goods are handed over to the first carrier, but the seller must obtain insurance.

1. DAP (Delivered at Place):

1. • Seller’s Responsibility: Delivers goods to the named place, ready for unloading.
   • Buyer’s Responsibility: Unloading costs and import duties.

1. DPU (Delivered at Place Unloaded):

1. • Seller’s Responsibility: Delivers and unloads goods at the named place.
   • Buyer’s Responsibility: Import duties and further transportation costs.

1. DDP (Delivered Duty Paid):

1. • Seller’s Responsibility: Delivers goods to the named place, including paying for all transportation, duties, and taxes.
   • Buyer’s Responsibility: Minimal; receives goods at the final destination.

Incoterms for Sea and Inland Waterway Transport Only

1. FAS (Free Alongside Ship):
   • Seller’s Responsibility: Delivers goods alongside the ship at the named port.
   • Buyer’s Responsibility: Loading onto the ship, ocean freight, insurance, and subsequent costs.

1. FOB (Free on Board):

1. • Seller’s Responsibility: Delivers goods on board the ship at the named port.
   • Buyer’s Responsibility: Ocean freight, insurance, and subsequent costs; risk transfers once goods are on board.

1. CFR (Cost and Freight):

1. • Seller’s Responsibility: Pays for transportation to the named port of destination.
   • Buyer’s Responsibility: Risk transfers once goods are on board; responsible for insurance and subsequent costs.

1. CIF (Cost, Insurance and Freight):

1. • Seller’s Responsibility: Pays for transportation and insurance to the named port of destination.
   • Buyer’s Responsibility: Risk transfers once goods are on board; responsible for subsequent costs.

Visual Representation of Responsibilities

Here’s a simplified way to understand how responsibilities are divided between the seller and the buyer under each Incoterm:

Incoterm	Export Customs	Delivery to Port/Place	Loading	Main Carriage	Insurance	Destination Unloading	Import Customs
EXW	Buyer	Buyer	Buyer	Buyer	Buyer	Buyer	Buyer
FCA	Seller	Seller	Buyer	Buyer	Buyer	Buyer	Buyer
CPT	Seller	Seller	Seller	Seller	Buyer	Buyer	Buyer
CIP	Seller	Seller	Seller	Seller	Seller	Buyer	Buyer
DAP	Seller	Seller	Seller	Seller	Seller	Seller	Buyer
DPU	Seller	Seller	Seller	Seller	Seller	Seller	Buyer
DDP	Seller	Seller	Seller	Seller	Seller	Seller	Seller
FAS	Seller	Seller	Buyer	Buyer	Buyer	Buyer	Buyer
FOB	Seller	Seller	Seller	Buyer	Buyer	Buyer	Buyer
CFR	Seller	Seller	Seller	Seller	Buyer	Buyer	Buyer
CIF	Seller	Seller	Seller	Seller	Seller	Buyer	Buyer

Understanding Incoterms is essential for international trade as they clarify the responsibilities and risks for both buyers and sellers, helping to avoid misunderstandings and disputes. If you need more specific information or have additional questions about Incoterms, feel free to ask!