Incoterms

Standardized terms established by the International Chamber of Commerce (ICC) used in export contracts to designate which party should pay costs such as insurance and transport

It defines the trade contract responsibilities and liabilities between buyer and seller. It is invaluable and cost-saving tool. The exporter and the importer need not undergo a lengthy negotiation about the conditions of each transaction.

Group Term Stand For Mode
E EXW EXWORKS ANY MODE OF TRANSPORT
F FCA FREE CARRIER ANY MODE OR TRANSPORT
FAS FREE ALONGSIDE SHIP INLAND & SEA TRANSPORT
FOB FREE ON BOARD INLAND & SEA TRANSPORT
C CFR COST & FREIGHT INLAND & SEA TRANSPORT
CIF COST, INSURANCE & FREIGHT INLAND & SEA TRANSPORT
CPT CARRIAGE PAID TO ANY MODE OF TRANSPORT
CIP CARRIAGE & INSURANCE PAID TO ANY MODE OF TRANSPORT
D DAT DELIVERED AT TERMINAL ANY MODE OF TRANSPORT
DAP DELIVERED AT PLACE ANY MODE OF TRANSPORT
DDP DELIVERED DUTY PAID ANY MODE OF TRANSPORT
EXWORKS Applies to goods available only at the seller’s premises. Buyer is responsible for loading the goods on truck or container at the seller’s premises, and for the subsequent costs and risks.- advantage for seller: minimum obligation- disadvantage for buyer: has all the liability
FCA [FCA – FREE CARRIER]seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place.Seller pays for carriage to the named place.Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.
FAS [FAS – FREE ALONGSIDE SHIP]seller delivers when the goods are placed alongside the vessel at the named port of shipment. The seller is required to clear the goods for export.? The buyer has to bear all costs and risks of loss or damage to the goods from that moment.
FOB [FOB – FREE ON BOARD]seller delivers when the goods pass the ship’s rail at the named port of shipment. This meansthe buyer has to bear all costs and risks to the goods from that point. The seller must clear the goods for export. If the parties do not intend to deliver the goods across the ship’s rail than FCA rule should be used.
CFR [CFR – COST & FREIGHT]seller delivers when the goods pass the ship’s rail in port of shipment. Seller must pay the costs and freight necessary to bring the goods to the named port of destination, BUT therisks of loss or damage, as well as any additional costs due to events occurring after the time of delivery, are transferred from seller to buyer. Seller must clear goods for export.
CIF [CIF – COST, INSRANCE & FREIGHT]The seller delivers when the goods pass the ship’s rail in the port of shipment. Seller must pay the cost and freight necessary to bring goods to named port of destination. Risk of loss and damage are the same as CFR. Seller also has to procure marine insurance against buyer’s risk of loss/damage during the carriage.? Seller must clear the goods for export.
CPT [CPT – CARRIAGE PAID TO]Seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. The buyer bearsall costs occurring after the goods have been so delivered. The seller must clear the goods for export.
CIP [CIP – CARRIAGE INSURANCE PAID TO]The delivery of goods and the cargo insurance to the named place of destination (discharge) at seller’s expense. Buyer assumes the import customs clearance, payment of customs duties and taxes, and other costs and risks.
DAT [DAT – DELIVERED AT TERMINAL]seller delivers when the goods once unladed from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at?a named port or place of destination. “Terminal”?includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal.? The seller bears all risks involved in bringing the goods to and unloading them at terminal at the named port or place of destination.
DAP [DAP – DELIVERED AT PLACE]seller delivers when the goods are placed at the disposal of the buyer on the arriving means of carriage ready for unloading at the names place of destination. The seller bears all risks involved in bring the goods to the named place however, shipper is not responsible for custom formalities.
DDP [DDP – DELIVERED DUTY PAID]This term represents maximum obligation to the seller. This term should not be used if the seller is unable to directly or indirectly obtain the import license. This term means the same as the DAP term with the exception that the seller also will bear all costs and risks of carrying out customs formalities including the payment of duties, taxes and customs fees.