Incoterms
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Learn about the Incoterms® and understand how they define the allocation of responsibilities, costs and risks between buyer and seller in the international transport of goods.
The Incoterms® (International Commercial Terms) are internationally recognised rules developed by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international trade transactions. Among other aspects, they establish which party is responsible for transport, insurance and customs clearance costs, as well as the point at which the risk transfers during the logistics process.
Below are the Incoterms® currently in force, together with a brief description of the responsibilities associated with each one.
EXW – Ex Works
The seller is only required to make the goods available for collection at their premises, such as a factory or warehouse. From that moment onwards, the buyer assumes all costs, risks and responsibilities related to transportation.
The seller is only required to make the goods available for collection at their premises, such as a factory or warehouse. From that moment onwards, the buyer assumes all costs, risks and responsibilities related to transportation.
FCA – Free Carrier
The seller delivers the goods to the carrier nominated by the buyer at an agreed location, such as a terminal or warehouse. Once the goods have been handed over to the carrier, the risk transfers to the buyer.
CPT – Carriage Paid To
The seller bears the cost of transporting the goods to the agreed destination. However, the risk transfers to the buyer once the goods have been delivered to the first carrier.
CIP – Carriage and Insurance Paid To
Similar to CPT, but with the additional obligation for the seller to arrange and pay for insurance covering the goods during transport to the agreed destination.
DAP – Delivered at Place
The seller is responsible for transporting the goods to the agreed destination. The buyer assumes the risk upon delivery and is responsible for import customs clearance, duties, taxes and other applicable charges.
DPU – Delivered at Place Unloaded
The seller is responsible for transporting and unloading the goods at the agreed destination. The risk transfers to the buyer once unloading has been completed.
DDP – Delivered Duty Paid
The seller assumes the maximum level of responsibility, bearing all costs and risks associated with the transaction, including transport, customs clearance, duties, taxes and delivery to the buyer's premises.
FAS – Free Alongside Ship
The seller delivers the goods alongside the vessel at the agreed port of shipment after completing export customs formalities. From that point onwards, all risks and costs are transferred to the buyer.
FOB – Free On Board
The seller is responsible for preparing, transporting and loading the goods onto the vessel at the port of shipment. The risk transfers to the buyer once the goods have been loaded on board.
CFR – Cost and Freight
The seller bears the transport costs to the destination port and the cost of loading the goods onto the vessel. However, the risk transfers to the buyer once the goods have been loaded on board at the port of origin.
CIF – Cost, Insurance and Freight
Similar to CFR, but with the additional obligation for the seller to arrange and pay for insurance covering the goods during transport to the destination port.
The seller delivers the goods to the carrier nominated by the buyer at an agreed location, such as a terminal or warehouse. Once the goods have been handed over to the carrier, the risk transfers to the buyer.
CPT – Carriage Paid To
The seller bears the cost of transporting the goods to the agreed destination. However, the risk transfers to the buyer once the goods have been delivered to the first carrier.
CIP – Carriage and Insurance Paid To
Similar to CPT, but with the additional obligation for the seller to arrange and pay for insurance covering the goods during transport to the agreed destination.
DAP – Delivered at Place
The seller is responsible for transporting the goods to the agreed destination. The buyer assumes the risk upon delivery and is responsible for import customs clearance, duties, taxes and other applicable charges.
DPU – Delivered at Place Unloaded
The seller is responsible for transporting and unloading the goods at the agreed destination. The risk transfers to the buyer once unloading has been completed.
DDP – Delivered Duty Paid
The seller assumes the maximum level of responsibility, bearing all costs and risks associated with the transaction, including transport, customs clearance, duties, taxes and delivery to the buyer's premises.
FAS – Free Alongside Ship
The seller delivers the goods alongside the vessel at the agreed port of shipment after completing export customs formalities. From that point onwards, all risks and costs are transferred to the buyer.
FOB – Free On Board
The seller is responsible for preparing, transporting and loading the goods onto the vessel at the port of shipment. The risk transfers to the buyer once the goods have been loaded on board.
CFR – Cost and Freight
The seller bears the transport costs to the destination port and the cost of loading the goods onto the vessel. However, the risk transfers to the buyer once the goods have been loaded on board at the port of origin.
CIF – Cost, Insurance and Freight
Similar to CFR, but with the additional obligation for the seller to arrange and pay for insurance covering the goods during transport to the destination port.
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