The Incoterms 2020 rules provide a guidance to companies to enable trade for the sale of goods.  The incoterms means “International Commercial Terms”.Incoterms 2020 rules are used worldwide in international transactions. Incoterms give clear guidance to seller and buyers about costs, risk and responsibilities while having international trade transactions.

Incoterms

  • E – EXW (Ex Works)
  • C – CPT – (Carriage Paid to), CIP (Carriage and Insurance Paid To), CFR (Cost and Freight) and CIF (Cost, Insurance and Freight)
  • F – FCA (Free Carrier), FOB (Free on Board) and FAS (Free Alongside Ship)
  • D – DAP (Delivered at Place), DDP (Delivered Duty Paid) and DPU (Delivered Duty Unpaid)

Applications

  • Procurement
  • Sales
  • Logistics

The International Chamber Commerce publishes Incoterms. Incoterms are a set of rules and guidelines which help trades around the world to work together and have a common understanding.

 




All transport modes

Sea and Inland waterway transport


Group
Incoterm
Seller / Buyer
Description
E
EXW | Ex Works

All transport modes


Costs
Risks

Export formalities Import formalities
- Delivery when seller places goods at Buyer's disposal at named place
- Buyer loads goods onto collecting vehicle
- Buyer pays transport - Buyer responsible for export where applicable
- If no specific point named by Buyer, Seller may select point "that best suits its purpose"
- Minimum seller obligation
- Best used for domestic/ Intra-trading bloc contracts
F
FCA | Free Carrier

All transport modes
Option 1
Option 1 @ Seller's premises


Costs
Risks

Export formalities Import formalities
- Buyer arranges and pays transport (including risk). Seller supports only if necessary (without cost and risk).
- Seller responsible for Export + Buyer responsible for import, where applicable.
- If no specific point named by Buyer, Seller may select point "that best suits its purpose"
- If an on-board Bill of Lading needed (e.g. under a LC), parties can agree under rule A6/B6;
a) Buyer will request carrier to issue on-board BL to the seller and
b) Seller will then tender such on-board BL to the Buyer.

Option 2
Option 2 @ Another place or "named place"


Costs
Risks

Export formalities Import formalities
Same as above. The named place is not the seller's premises. The goods are delivered ; when the goods are loaded on the seller's transport, ready for unloading from the seller's transport and/or at the availability of the carrier nominated by the buyer
F
FAS | Free Alongside Ship

Sea and Inland waterway transport


Costs
Risks

Export formalities Import formalities
- Delivery when goods are place alongside vessel at port of shipment.
- Buyer pays transport.
- Seller responsible for export; Buyer responsible for import where applicable.
- If no specific loading point named by Buyer, Seller may select point "that best suits its purpose"
F
FOB | Free On Board

Sea and Inland waterway transport


Costs
Risks

Export formalities Import formalities
- Delivery when goods are placed on board vessel at port of shipment.
- Buyer pays transport.
- Seller responsible for export; Buyer responsible for import where applicable.
- If no specific loading point named by Buyer, Seller may select point "that best suits its purpose".
- For goods in containers, consider using FCA instead.
C
CPT | Carriage Paid To

All transport modes


Costs
Risks

Export formalities Import formalities
- Places (or points) of delivery and destination. Two locations are important.
- Delivery / Risk transfers when Seller hands goods to carrier. Seller pays for transport, but does not have transport risk.
- Seller responsible for export; Buyer responsible for import where applicable.
- Where no specific point at the named place of destination is agreed or determined by practice, Seller may select the point at named place of destination that best suits its purpose.

C
CIP | Carriage and Insurance Paid To

All transport modes


Costs
Risks
Insurance

Export formalities Import formalities
- Places (or points) of delivery and destination. Two locations are important.
- Delivery / Risk transfers when Seller hands goods to carrier. Seller pays for transport, but does not have transport risk.
- Seller contracts for "all risks" cover insurance against Buyer's transport risk.
- Seller responsible for export; Buyer responsible for import where applicable.
- Where no specific point at the named place of destination is agreed or determined by practice, Seller may select the point at named place of destination that best suits its purpose.

C
CFR | Cost and Freight

Sea and Inland waterway transport


Costs
Risks

Export formalities Import formalities
- Delivery (and transfer of risk) when Seller hands good over to carrier, but seller pays for transport, without bearing transport risk.
- Seller responsible for export; Buyer responsible for import where applicable

C
CIF | Cost Insurance and Freight

Sea and Inland waterway transport


Costs
Risks
Insurance

Export formalities Import formalities
- Delivery (and transfer of risk) when Seller hands good over to carrier, but seller pays for transport, without bearing transport risk.
- Seller contracts for minimum cover insurance against Buyer´s transport risk.
- Seller responsible for export; buyer responsible for import where applicable

D
DAP | Delivered at

All transport modes


Costs
Risks

Export formalities Import formalities
- Delivery when Seller places the goods at Buyer's disposal not unloaded on arriving means of transport at named place of destination.
- Seller pays for transport.
- Seller responsible for export; Buyer responsible for import where applicable.
- Where no specific point at the named place of destination is agreed or determined by practice, Seller may select the point at named place of destination that best suits its purpose.

D
DPU | Delivered at Place Unloaded

All transport modes


Costs
Risks

Export formalities Import formalities
- Delivery when Seller unloads the goods from arriving transportation and places them at buyer´s disposal at named place of destination.
- Seller pays for transport
- Seller responsible for export; Buyer responsible for import where applicable.
- Where no specific point at the named place of destination is agreed or determined by practice, Seller may select the point at named place of destination that best suit its purpose.

D
DDP | Delivered Duty Paid

All transport modes


Costs
Risks

Export formalities Import formalities
- Delivery when Seller places the goods, cleared for import, at Buyer´s disposal not unloaded on arriving means of transport at named place.
- Seller pays for transport
- Seller responsible for export and import, where applicable.
- Where no specific point at the named place of destination is agreed or determined by practice, Seller may select the point at named place of destination that best suits its purpose.

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