Incoterms

Incoterms are international trade terms that represent standard conditions in international sales contracts. The table below illustrates the responsibility of the parties

The Incoterms rules provide trade terms, abbreviated to the first three letters, that reflect business practices in contracts for the international sale of goods. The Incoterms rules mainly define the duties, costs and risks arising from the delivery of goods from sellers to buyers

1. EXW (ex works, warehouse, factory): goods are taken by the buyer from the seller’s warehouse as specified in the contract, payment of export duties is the responsibility of the buyer.
2. FCA (free carrier, free carrier): goods are delivered to the main carrier of the customer to the terminal of dispatch specified in the contract, export duties are paid by the seller.
3. CPT (carriage paid to…): the goods are delivered to the main carrier of the customer, the main carriage is paid by the seller up to the terminal of arrival specified in the contract, insurance costs are borne by the buyer, import duty and delivery from the arrival terminal of the main carrier are performed by the buyer.
4. CIP (carriage and insurance paid to…): same as CPT, but the main transport is insured by the seller.
5. DAT (delivered at terminal): delivery is paid to the import customs terminal specified in the contract, it means that export payments and main transportation, including insurance, are paid by the seller, customs clearance on import is carried out by the buyer.
6. DAP (delivered at place): delivery to the destination specified in the contract, import duties and local taxes are paid by the buyer.
7. DDP (delivered duty paid): The goods are delivered to the customer at the destination specified in the contract, exempted from all customs duties and risks.

Incoterms 2010 also defines four terms applicable exclusively to maritime transport and the transport of territorial waters:

1. FAS (free alongside ship): the goods are delivered to the buyer’s ship, the port of loading is specified in the contract, trans-shipment and loading are paid by the buyer.
2. FOB (free on board): the goods are shipped to the buyer’s ship, the trans-shipment is paid by the seller.
3. CFR (cost and freight): the goods are delivered to the buyer’s destination port specified in the contract, the main transport insurance, the unloading and trans-shipment are paid by the buyer.
4. CIF (Cost, Insurance and Freight): the same as CFR, but the main transportation is insured by the seller.