Glossary of Incoterms
Glossary of Incoterms
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EXW (Ex Works): The seller makes goods available at their premises. The buyer bears all risks and costs from that point onward, including transportation, insurance, and customs clearance.
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FCA (Free Carrier): The seller delivers goods to a carrier or another person nominated by the buyer at a named place. The seller is responsible for export clearance.
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FAS (Free Alongside Ship): The seller delivers goods alongside the vessel at a named port. The buyer is responsible for loading the goods onto the vessel.
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FOB (Free On Board): The seller delivers goods on board the vessel at the named port of shipment. The seller is responsible for export clearance.
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CFR (Cost and Freight): The seller delivers goods on board the vessel or procures the goods once delivered, at the named port of destination. The seller must arrange and pay for transportation to the destination port.
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CIF (Cost, Insurance, and Freight): Similar to CFR, but the seller also arranges and pays for marine insurance against the buyer's risk of loss or damage during transit.
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CPT (Carriage Paid To): The seller delivers goods to a carrier or another person nominated by the seller at an agreed place. The seller is responsible for transportation costs to the named place.
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CIP (Carriage and Insurance Paid To): Similar to CPT, but the seller also arranges and pays for insurance against the buyer's risk of loss or damage during transit.
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DAP (Delivered at Place): The seller delivers goods when placed at the disposal of the buyer at the named place of destination. The seller is responsible for all costs and risks until the goods are ready for unloading.
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DPU (Delivered at Place Unloaded): Similar to DAP, but the seller must also unload the goods at the named place of destination.
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DDP (Delivered Duty Paid): The seller delivers goods when placed at the disposal of the buyer, cleared for import, and ready for unloading at the named place of destination. The seller is responsible for all costs, including duties and taxes.
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DAT (Delivered at Terminal): The seller delivers goods when unloaded from the arriving means of transport at a named terminal at the named place of destination. The seller bears all risks until unloading.
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DAF (Delivered at Frontier): The seller delivers goods when they are made available to the buyer at the named point and place at the frontier, but before the customs border of the adjoining country. The buyer bears all risks beyond that point.
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DES (Delivered Ex Ship): The seller delivers when the goods are placed at the disposal of the buyer on board the ship, uncleared for import at the named port of destination. The seller bears all risks and costs until unloading.
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DEQ (Delivered Ex Quay): The seller delivers when the goods are placed at the disposal of the buyer on the quay (wharf) at the named port of destination, cleared for import. The seller bears all risks and costs until unloading.
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DTP (Delivered at Terminal Paid): The seller delivers goods when unloaded from the arriving means of transport at a named terminal at the named place of destination. The seller bears all risks until unloading and also pays for unloading at the terminal.
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DDU (Delivered Duty Unpaid): The seller delivers goods when placed at the disposal of the buyer, uncleared for import, and ready for unloading at the named place of destination. The buyer is responsible for import clearance, duties, and taxes.
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FOA (Free On Airline): The seller delivers goods on board an aircraft at a named airport of departure. The seller is responsible for export clearance.
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FOR (Free On Rail): The seller delivers goods on board a railcar at a named point of origin. The seller is responsible for export clearance.
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FOT (Free On Truck): The seller delivers goods on board a truck at a named point of origin. The seller is responsible for export clearance.
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FCA (Free Carrier Named Place): The seller delivers goods to the carrier or another person nominated by the buyer at a named place. The seller is responsible for export clearance.
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FAS (Free Alongside Ship Named Port of Shipment): The seller delivers goods alongside the vessel at the named port of shipment. The buyer is responsible for loading the goods onto the vessel.
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FCA (Free Carrier Named Point): The seller delivers goods to the carrier or another person nominated by the buyer at a named point. The seller is responsible for export clearance.
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FCA (Free Carrier Named Point of Origin): The seller delivers goods to the carrier or another person nominated by the buyer at a named point of origin. The seller is responsible for export clearance.
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FCA (Free Carrier Named Point of Departure): The seller delivers goods to the carrier or another person nominated by the buyer at a named point of departure. The seller is responsible for export clearance.
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FCA (Free Carrier Named Point of Destination): The seller delivers goods to the carrier or another person nominated by the buyer at a named point of destination. The seller is responsible for export clearance.
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FOB (Free On Board Named Port of Shipment): The seller delivers goods on board the vessel at the named port of shipment. The seller is responsible for export clearance.
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FOB (Free On Board Named Port of Loading): The seller delivers goods on board the vessel at the named port of loading. The seller is responsible for export clearance.
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FOB (Free On Board Named Port of Origin): The seller delivers goods on board the vessel at the named port of origin. The seller is responsible for export clearance.
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FOB (Free On Board Named Port of Departure): The seller delivers goods on board the vessel at the named port of departure. The seller is responsible for export clearance.
The role of Incoterms in International Trade
Incoterms play a pivotal role in international trade by establishing clear guidelines and responsibilities for buyers and sellers throughout the transaction process. These standardized terms mitigate misunderstandings and disputes, providing a common language for participants in global commerce. By defining who bears the costs and risks associated with transportation, insurance, and customs clearance at each stage of the journey, Incoterms help streamline logistical operations and financial planning. Moreover, they facilitate smoother communication and negotiation between parties from diverse cultural and legal backgrounds. With the dynamic nature of global trade, understanding and selecting the appropriate Incoterms are paramount for effectively managing transactions, reducing uncertainties, and fostering trust among trading partners. Ultimately, adherence to Incoterms enhances efficiency, minimizes potential disputes, and ensures the smooth flow of goods across international borders.