Incoterms
- E-TERM The buyer arranges all transport-related matters.
- F-TERMS The buyer arranges most of the transport-related matters. Shipping and customs arrangements are the seller’s responsibility.
- C-TERMS C-terms operate in the opposite direction. The seller arranges most of the transport-related matters. The customer assumes the risk of the shipment.
- D-TERMS According to these terms, the seller is given responsibility. The seller assumes the risks and costs.
EXW (Ex Works): The buyer can pick up the goods from the seller’s location or another designated place. The seller’s responsibilities exclude customs procedures and truck loading. After loading, all risks and costs are the responsibility of the buyer. Unless otherwise specified, the seller is not responsible for loading the buyer’s vehicle. The buyer must handle export documentation for customs.
FCA (Free Carrier): The FCA delivery term covers all modes of transport. The seller completes customs procedures and delivers the goods to the agreed terminal. If loading is at the seller’s address, the seller loads the goods onto the truck. The seller is responsible for packaging but has no obligation to unload at the transport company’s terminal.
CPT (Carriage Paid To): With CPT, the seller pays for shipping to the delivery destination. The buyer assumes the risk once the goods are handed to the first carrier. The seller pays export customs fees, and the buyer handles import customs procedures. Buyers coordinate with sellers to ensure that Terminal Handling Charges (THC) are included in the shipping prices collected by the seller from the terminal.
CIP (Carriage and Insurance Paid To): The seller pays for all shipping and insurance costs up to a specified destination. Once the goods are delivered, the risk transfers to the first carrier. The seller’s delivery obligation is fulfilled once the goods are handed over to the carrier. After reaching the final destination, the seller is no longer responsible.
DPU (Delivered at Place Unloaded): Under DPU, the seller is responsible until delivery, and unloads the goods for the buyer. The seller pays for export and shipping customs fees. The buyer handles import customs procedures.
DAP (Delivered at Place): The seller delivers the goods to a specified place, and the buyer assumes the risk at delivery. The buyer pays import customs fees, and the seller clears the goods for export.
DDP (Delivered, Duty Paid): The seller arranges the entire shipping process until the goods are delivered to a specified location. After delivery, the customer assumes the risk. While the buyer is responsible for import customs duties, taxes, and fees, the seller is responsible for clearing the goods for export.
FAS (Free Alongside Ship): The seller takes the products from the factory, handles the export customs procedures, and delivers them to the departure point (usually the ship’s loading dock). The buyer takes over the delivery process from there, including the first leg of the journey.
FOB (Free On Board): The seller assumes costs and risks until the goods are on board the ship. The charges and responsibilities are divided between the buyer and seller when the goods are loaded onto the ship. The buyer takes full responsibility during unloading. The seller covers export customs and transportation costs, while the buyer handles import customs procedures.
CFR (Cost and Freight): The customer is not responsible for delivery costs until the goods are loaded onto the ship. Until then, the seller bears the shipping costs to the destination port. Insurance for the goods is not included in the price. The seller fulfills the delivery obligation when the goods are handed over to the carrier (not when they reach the destination). This Incoterm was previously known as CNF or C&F.
CIF (Cost, Insurance, and Freight): Similar to CFR, but CIF differs in that the seller must also arrange and pay for shipping insurance until the goods reach the destination port.
(I) INCOTERM RULES FOR ANY MODE OF TRANSPORTATION
- EXW (Ex Works): The buyer can pick up the goods from the seller’s location or another designated place. The seller’s responsibilities exclude customs procedures and truck loading. After loading, all risks and costs are the responsibility of the buyer. Unless otherwise specified, the seller is not responsible for loading the buyer's vehicle. The buyer must handle export documentation for customs.
- FCA (Free Carrier): The FCA delivery term covers all modes of transport. The seller completes customs procedures and delivers the goods to the agreed terminal. If loading is at the seller's address, the seller loads the goods onto the truck. The seller is responsible for packaging but has no obligation to unload at the transport company’s terminal.
- DPU (Delivered at Place Unloaded): Under DPU, the seller is responsible until delivery, and unloads the goods for the buyer. The seller pays for export and shipping customs fees. The buyer handles import customs procedures.
- DAP (Delivered at Place): The seller delivers the goods to a specified place, and the buyer assumes the risk at delivery. The buyer pays import customs fees, and the seller clears the goods for export.
- CPT (Carriage Paid To): With CPT, the seller pays for shipping to the delivery destination. The buyer assumes the risk once the goods are handed to the first carrier. The seller pays export customs fees, and the buyer handles import customs procedures. Buyers coordinate with sellers to ensure that Terminal Handling Charges (THC) are included in the shipping prices collected by the seller from the terminal.
- CIP (Carriage and Insurance Paid To): The seller pays for all shipping and insurance costs up to a specified destination. Once the goods are delivered, the risk transfers to the first carrier. The seller’s delivery obligation is fulfilled once the goods are handed over to the carrier. After reaching the final destination, the seller is no longer responsible.
- DDP (Delivered, Duty Paid): The seller arranges the entire shipping process until the goods are delivered to a specified location. After delivery, the customer assumes the risk. While the buyer is responsible for import customs duties, taxes, and fees, the seller is responsible for clearing the goods for export.
(II) INCOTERM RULES FOR SEA TRANSPORTATION
- FAS (Free Alongside Ship): The seller takes the products from the factory, handles the export customs procedures, and delivers them to the departure point (usually the ship's loading dock). The buyer takes over the delivery process from there, including the first leg of the journey.
- FOB (Free On Board): The seller assumes costs and risks until the goods are on board the ship. The charges and responsibilities are divided between the buyer and seller when the goods are loaded onto the ship. The buyer takes full responsibility during unloading. The seller covers export customs and transportation costs, while the buyer handles import customs procedures.
- CFR (Cost and Freight): The customer is not responsible for delivery costs until the goods are loaded onto the ship. Until then, the seller bears the shipping costs to the destination port. Insurance for the goods is not included in the price. The seller fulfills the delivery obligation when the goods are handed over to the carrier (not when they reach the destination). This Incoterm was previously known as CNF or C&F.
- CIF (Cost, Insurance, and Freight): Similar to CFR, but CIF differs in that the seller must also arrange and pay for shipping insurance until the goods reach the destination port.
