As part of shipping agreements, INCOTERMS (International Commercial Terms) are utilized. INCOTERMS rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. These trade terms often define the roles of the buyer and seller including ownership, risk and responsibilities of both parties and the transfer of goods throughout the shipping process. In the following, we will talk in detail about the meaning and definiton of all different incoterms and provide a chart with a complete list of all terms.

INCOTERMS: Definition and Meaning

A registered trademark of the International Chamber of Commerce, the first INCOTERMS were issued in 1923 and since then they have been updated regularly with the latest set of terms published in 2010. Incoterms are used in contracts in a 3-letter format followed by the place specified in the contract such as the port or where goods are to be picked up.

In the latest update, there are 11 general rules described and which can be applied to any mode or modes of transportation and there are also rules specific to sea and inland waterway transport.

All INCOTERM Rules (Chart + List)

We encourage everybody to work with logistics partners and to refer to the International Chamber of Commerce for more details on INCOTERMS. A description of the 11 general rules is provided below, courtesy of the Chamber:

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EXW – Ex Works – The seller delivers when it places the goods at the disposal of the buyer at the seller’s location or at another specified place. The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export.

FCA – Free Carrier – The seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s location or another named place.

FAS – Free Alongside Ship – The seller delivers when the goods are placed alongside the vessel nominated by the buyer at the named port of shipment. The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the buyer bears all costs from that moment onwards.

FOB – Free On Board – The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.

CPT – Carriage Paid To – The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place. The seller must pay the costs of carriage necessary to bring the goods to the destination.

CFR – Cost and Freight – The seller delivers the goods on board the vessel. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

CIF – Cost, Insurance and Freight – The seller delivers the goods on board the vessel. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. The seller is only required to obtain minimum insurance coverage. However, should the buyer wish to have more insurance protection, it will need either to agree with the seller or to make its own extra insurance arrangements.

CIP – Carriage and Insurance Paid To – The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place. The seller must pay the costs of carriage to bring the goods to the destination. In addition, the seller is required to obtain minimum insurance coverage. Should the buyer wish to have more insurance protection, it will need either to agree with the seller or to make its own extra insurance arrangements.

DAT – Delivered At Terminal – The seller delivers when the goods are unloaded and are placed at the disposal of the buyer at a named terminal at the named port or place of destination. The seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.

DAP – Delivered At Place – The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the destination. The seller bears all risks involved in bringing the goods to the named place.

DDP – Delivered Duty Paid – The seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on arrival and ready for unloading at destination. The seller bears all costs and risks involved in bringing the goods to destination and is obligated to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.


For Additional Information

Please ask your operations manager or sales manager

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