Resources
Understanding Incoterms
Incoterms 2020:
A Guide to International Trade
What are Incoterms?
Incoterms are standardized rules established by the International Chamber of Commerce (ICC) that define trade terms for the sale of goods globally.
Why were Incoterms created?
They were introduced to clarify the responsibilities, costs, and risks associated with international trade transactions.
When did the latest version of Incoterms take effect?
Incoterms 2020 came into effect on January 1, 2020.
What do Incoterms specify?
They outline the obligations and costs between buyers and sellers, detailing when risk transfers during a transaction.
What do Incoterms not cover?
They do not address ownership transfer, payment terms, or insurance responsibilities, with only CIF and CIP mentioning insurance as the seller’s duty.
What are the most common Incoterms?
EXW (Ex Works)
The seller provides the goods at their location, with the buyer responsible for all costs and risks from that point onward.
FCA (Free Carrier)
The seller delivers the goods, cleared for export, either at their premises or another specified location nominated by the buyer.
FAS (Free Alongside Ship)
The seller places the goods alongside the vessel at the port of shipment, transferring risk to the buyer at that moment.
FOB (Free On Board)
The seller loads the goods onto the vessel designated by the buyer, with risk transferring to the buyer once the goods are on board.
CFR (Cost and Freight)
The seller pays for the transport of the goods to the destination port, with risk transferring when the goods are loaded onto the vessel.
CIF (Cost, Insurance and Freight)
Similar to CFR, but the seller must also obtain minimum insurance for the goods during transit.
CPT (Carriage Paid To)
The seller delivers the goods to the buyer’s specified location, ready for unloading, with all risks and costs covered up to that point.
CIP (Carriage and Insurance Paid To)
The seller covers transport costs and minimum insurance to a named destination, with risk transferring when the goods are with the carrier.
DPU (Delivered at Place Unloaded)
The seller delivers and unloads the goods at the specified destination, covering all associated costs and risks until that point.
DAP (Delivered at Place)
The seller delivers the goods to the buyer’s specified location, ready for unloading, with all risks and costs covered up to that point.
DDP (Delivered Duties Paid)
The seller takes full responsibility for delivering the goods to the buyer's location, including all costs, duties, and taxes, except for unloading.
For further information and to access the official Incoterms wallchart, visit the ICC website:
[ICC Official Site]
(https://iccwbo.org)
