About INCOTERMS
Incoterms are a set of international rules for the interpretation of the most commonly used trade terms. There are 11 main terms. These denote the points at which shipper, carrier and consignee risk and responsibility start and end.
This set of international rules was first published in 1936 known as "INCOTERMS 1936" by the International Chamber of Commerce. Incoterms are amended every 10 years.
Incoterms are recognized globally by courts and other authorities. Frequently, parties to a contract are unaware of the different trading practices in their respective countries. This lack of knowledge can lead to misunderstandings and disputes between customer and supplier. The incorporation of Incoterms in international sales contracts reduces this risk.
Click on one of the Incoterms above to see more detailed information.
CFR - Cost and Freight (Maritime Only)
Cost of goods and freight, duty unpaid, to a named port of destination. Sea or inland waterway transport only. Insurance to be covered by the buyer.
CIF - Cost, Freight and Insurance
Cost of goods plus insurance and freight, duty unpaid, to a named port of destination. Sea or inland waterway transport only.
CIP - Carriage and Insurance Paid To
Costs of carriage and insurance of the goods, duty unpaid to the named destination. Applies to all modes of transport.
CPT - Carriage Paid To
Costs of carriage of the goods, duty unpaid to the named destination. Applies to all modes of transport. Insurance to be covered by the buyer.
DAP - Delivered at Place
The seller delivers the goods when they are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. Parties are advised to specify as clearly as possible the point within the agreed place of destination, because risks transfer at this point from seller to buyer. If the seller is responsible for clearing the goods, paying duties etc consideration should be given to using the DDP term.
DAT - Delivered at Terminal
Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. Both parties should agree the terminal and if possible a point within the terminal at which point the risks will transfer from the seller to the buyer of the goods. If it is intended that the seller is to bear all the costs and responsibilities from the terminal to another point DAP or DDP may apply.
DDP - Delivered Duty Paid
Costs of delivery, including duty, paid up to a named place in the country of importation. Applies to all modes of transport.
EXW - Ex-Works
The goods are made available to the buyer at the exporter's premises, suitably packed unless otherwise arranged for a known means of transport.
FCA - Free Carrier
Cost of delivery, cleared for export, into the charge of the carrier named by the buyer at the named place or point. Allied mostly to air and rail transport but could be used for all modes.
FAS - Free Alongside Ship (Maritime Only)
All cost up to delivery on quay or in lighters (barges) at the named port of shipment. Sea or inland waterway transport only.
FOB - Free On-Board (Maritime Only)
All costs up to delivery over the ships rail at the named port of shipment. Sea or inland waterway transport only.
