INCOTERMS are a set of three-letter standard 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 (…named place of delivery)The Seller’s only responsibility is to make the goods available at the Seller’s premises. The Buyer bears the full cost and risks of moving the goods from there to destination.
FCA – FREE CARRIER (…named place of delivery)The Seller delivers the goods, cleared for export, to the carrier selected by the Buyer. The Seller leads the goods if the carrier pickup is at the Seller’s premises. From that point, the Buyer bears the cost and risks of moving the goods to destination.
CPT – CARRIAGE PAID TO (… named place of destination)The Seller pays for moving the goods to destination. From the time the goods are transferred to the first carrier, the Buyer bears the risks of loss or damage.
CIP – CARRIAGE AND INSURANCE PAID TO – (… named place of destination)The Seller pays for moving the goods to destination. From the time the goods are transferred to the first carrier, the buyer bears the risks of the loss or damage. The Seller however, purchases the cargo insurance.
DAT – DELIVERED AT TERMINAL (…named terminal at the port or place of destination)The Seller delivers when the goods, once uploaded from the arriving means of transport, are placed at the Buyer’s disposal at a named terminal at the named port or place of destination. “Terminal” includes any place, whether covered or not, such as quay, warehouse, container yard or road, rail or air cargo terminal. The Seller bears all risks involved in the bringing of goods to the unloading them at the terminal at the named port or place of destination.
DAP – DELIVERED AT PLACE (…named place of destination)The Seller delivers when the goods are placed at the Buyer’s disposal on the arriving means of transport ready for uploading at the named place of destination. The Seller bears all the risks involved in bringing the goods to the named place.
DDP – DELIVERED DUTY PAID (…named place)The Seller delivers the goods – cleared for import – to the Buyer at destination. The Seller bears all the cost and risks of moving the goods to destination, including the payment of Customs duties and taxes.
MARITIME – ONLY TERMS
FAS – FREE ALONGSIDE SHIP (… named port of shipment)The Sellerdelivers the goods to the origin port. From that point, the Buyer bears all the costs and the risks of loss or damage.
FOB – FREE ON BOARD (… named port of shipment)The Seller delivers the goods on board the ship and clears the goods for export. From that point, the Buyer bears all the cost and risks of loss or damage.
CFR – COST AND FREIGHT (… named port of destination)The Seller clears the goods for export and pays the cost of moving the goods to destination. The Buyer bears all the risks of loss or damage.
CIF – COST INSURANCE AND FREIGHT – (…named port of destination)The Seller clears the goods for export and pays the cost of moving the goods to the port of destination. The Buyer bears all the risks of loss and damage. The Seller however, purchases the cargo insurance.
