Incoterms
Incoterms
Incoterms provide standard trade definitions commonly used in international sales contracts.
Devised and published by the International Chamber of Commerce (ICC), Incoterms are accepted
by governments, legal authorities and practitioners worldwide. Incoterms cut out uncertainties
arising from differing interpretations of transportation terms in different countries, and go a long
way towards providing the legal certainty upon which mutual confidence between business
partners must be based.
EXW
Ex Works
(named place of delivery)
The seller is responsible for making the good available at the seller’s premises. The buyer bears all risks
from there until destination. The seller is not obliged to load the goods or to fulfil the necessary export
customs formalities.
FCA
Free Carrier
(named place of delivery)
The seller/exporter is responsible for loading the goods and providing export documentation.
FAS
Free Alongside Ship
(named port of shipment)
The seller delivers the goods, cleared for export, at a named port of shipment. The buyer pays for the
THC incurred at the terminal.
FOB
Free On Board
(named port of shipment)
The seller clears the good for export, and pays for the THC at a named port. Risk passes to the buyer
when the container is placed on board the vessel.
All Incoterms include a “named
place”, which is extremely
important to the agreement. If the
terms are EXW or FCA, the named
place is the loading location. For
FAS and FOB, it is the port of
loading, while for CFR and CIF, it
is the destination port. For DAT it
is the named terminal at the port,
while for DAP and DDP the named
place is the final destination.
The latest version of Incoterms is
Incoterms 2010, which came into
effect on 1 January 2011.
Each Incoterm is referred to by a
three-letter abbreviation. Some of
the main ones used in our industry
are defined in the main graph.
To ensure you are using Incoterms
correctly, please consult the full ICC
texts, available at:
www.incoterms.com
CFR
Cost and Freight
(named port of destination)
The seller pays for the main carriage of good to named destination port, but the buyer is liable for loss
and damage during transportation and should be properly insured.
CIF
Cost, Insurance & Freight
The seller has to provide marine insurance against the buyer's risk of loss and damage during
(named port of destination)
transportation.
DDP
Delivered Duty Paid
Seller pays both duties and customs clearance. Note: Whether excise tax is included or not must be
(named place of destination)
specifically agreed upon, as these are not part of the import duties.
DAT
Delivered At Terminal
(named terminal at port or
place of destination)
Seller delivers the goods to an agreed place inside the terminal. Risk is transferred to the buyer as soon
as the goods have been unloaded.
DAP
Delivered At Place
Seller delivers the goods to place of destination. Risk is transferred to the buyer upon unloading.
(named place of destination)
Seller's Risk
Buyer's Risk
Seller's Cost
Buyer's Cost
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