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.
EXW (EX Works)
Incoterms® 2020 — The seller makes goods available at their premises, and the buyer handles all transport and risks from that point onward.
FCA (Free Carrier)
Incoterms® 2020 — The seller is responsible for delivering goods to the carrier, after which the buyer assumes the risk.
CPT (Carriage Paid To)
Incoterms® 2020 — The seller pays for transportation to a specified destination, but the buyer takes on the risk once the goods are handed to the carrier.
CIP (Carriage & Insurance Paid)
Incoterms® 2020 — The seller covers transportation and insurance, but risk passes to the buyer once the goods reach the first carrier.
DAP (Delivered at Place)
Incoterms® 2020 — The seller bears the risk and cost of delivering goods to a named destination, but the buyer is responsible for customs and import duties.
DPU (Delivered at Place Unloaded)
Incoterms® 2020 — The seller is responsible for delivering and unloading goods at a named place. This replaced the previous “DAT” (Delivered at Terminal) term.
DDP (Delivered Duty Paid)
Incoterms® 2020 — The seller is responsible for delivering the goods to the destination, including all duties, taxes, and customs clearance.
FAS (Free Alongside Ship)
Incoterms® 2020 — The seller delivers the goods alongside the ship, and the buyer takes over responsibility for loading and transport.
FOB (Free on Board)
Incoterms® 2020 — The seller is responsible for loading the goods onto the ship, with risk passing to the buyer once onboard.
CFR (Cost & Freight)
Incoterms® 2020 — The seller covers the transport cost to the destination port, but risk transfers to the buyer once the goods are on board.
CIF (Cost Insurance & Freight)
Incoterms® 2020 — Similar to CFR, but the seller must also provide insurance.