These are 11 Incoterms established by the International Chamber of Commerce (ICC). Here’s a brief description of each:
- EXW (Ex Works): The seller makes the goods available at their premises. The buyer is responsible for all transportation costs and risks in bringing the goods to their final destination.
- FCA (Free Carrier): The seller delivers the goods, cleared for export, to a carrier chosen by the buyer at a specified location. The risk transfers to the buyer when the goods are handed over to the first carrier.
- CPT (Carriage Paid To): The seller pays for the carriage of the goods to a named destination. The risk transfers to the buyer when the goods are handed over to the first carrier.
- CIP (Carriage and Insurance Paid to): Similar to CPT, but the seller also has to insure the goods for transport. The buyer assumes the risk once the goods are handed over to the carrier.
- DAP (Delivered at Place): The seller is responsible for all costs and risks associated with delivering the goods to a named place of destination, but not for unloading the goods.
- DPU (Delivered at Place Unloaded, formerly DAT): The seller delivers and unloads the goods at the named place of destination. The seller bears all risks involved in bringing the goods to and unloading them at the destination.
- DDP (Delivered Duty Paid): The seller is responsible for delivering the goods to the named place in the buyer’s country and pays all costs in bringing the goods to the destination including import duties and taxes.
- FAS (Free Alongside Ship): The seller places the goods alongside the buyer’s vessel at the named port of shipment. The risk transfers to the buyer when the goods are alongside the ship.
- FOB (Free On Board): The seller bears all costs and risks until the goods are loaded on board the vessel. The risk transfers to the buyer once the goods are on board.
- CFR (Cost and Freight): The seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the ship.
- CIF (Cost, Insurance, and Freight): It’s similar to CFR, but the seller also has to insure the goods during the transport. The buyer assumes the risk when the goods are loaded on the ship.
Each Incoterm is a set of rules that define the responsibilities of sellers and buyers for the delivery of goods under sales contracts. They are used globally and are integral in international trade to provide clarity and predictability. It’s important to note that the choice of Incoterm can significantly impact the cost and risk involved in shipping goods.
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This page was last updated on December 31, 2023.
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