Incoterms® (international commercial terms) are an established and internationally accepted set of rules in contracts for the shipping and sale of goods around the world. They were established by the International Chamber of Commerce in 1936, to designate which party is responsible for paying a specific segment of the global transportation of goods process and who is responsible during each segment.
EXW - EX WORKS (NAMED PLACE OF DELIVERY)
Also the clearance of Customs and the export documentation are also part of the buyer’s duties.
FCA - FREE CARRIER (NAMED PLACE OF DELIVERY)
FAS - FREE ALONGSIDE SHIP (NAMED PORT OF SHIPMENT)
FOB - FREE ON BOARD (NAMED PORT OF SHIPMENT)
It’s important to note that FOB should only be used for non-containerized ocean freight and inland waterway transportation of goods. For other shipping modes FCA should be used instead.
CFR - COST AND FREIGHT (NAMED PORT OF DESTINATION)
CIF - COST, INSURANCE & FREIGHT (NAMED PORT OF DESTINATION)
CPT - CARRIAGE PAID TO (NAMED PLACE OF DESTINATION)
CIP - CARRIAGE AND INSURANCE PAID TO (NAMED PLACE OF DESTINATION)
The CIP mode is a valid option for every kind of shipping while the CIF mode (at the end of this list) is to be used only for non-containerized ocean freight and inland waterway transport of goods.
DAT - DELIVERED AT TERMINAL (NAMED TERMINAL AT PORT OR PLACE OF DESTINATION)
The buyer is responsible for all the costs incurred after unloading (as could be import duties, taxes, customs, etc).
DAP - DELIVERED AT PLACE (NAMED PLACE OF DESTINATION)
When the goods arrive in the destination country, the buyer is responsible for the customs clearance process as well as the payment of the necessary duties and taxes.
DDP - DELIVERY DUTY PAID (NAMED PLACE OF DESTINATION)
As the seller has to obtain all the necessary import authorizations, and pay all the customs and taxes needed in the destination country, this mode can be very risky for the seller if the destination country’s legal regulations are not very well known.
Acronyms for International Trade