Here are brief descriptions of the 11 Incoterms used in international trade:
- EXW (Ex Works):
The seller makes the goods available at their premises. The buyer bears all costs and risks involved in transporting the goods to their destination. - FCA (Free Carrier):
The seller delivers the goods to a carrier or another person nominated by the buyer at the seller’s premises or another named place. - CPT (Carriage Paid To):
The seller pays for carriage to the named place of destination. Risk transfers to the buyer upon delivery to the first carrier. - CIP (Carriage and Insurance Paid To):
Same as CPT, but the seller also pays for insurance against the buyer’s risk of loss or damage during transit. - DAP (Delivered at Place):
The seller delivers the goods ready for unloading at the named destination. The buyer is responsible for import duties and further transport. - DPU (Delivered at Place Unloaded):
The seller delivers and unloads the goods at the named destination. The buyer handles import formalities. - DDP (Delivered Duty Paid):
The seller bears all costs and risks, including import duties and taxes, until the goods are delivered at the buyer’s location. - FAS (Free Alongside Ship):
The seller delivers the goods alongside the vessel at the named port of shipment. The buyer is responsible from that point onward. - FOB (Free On Board):
The seller delivers the goods on board the vessel at the port of shipment. Risk transfers once goods are on board. - CFR (Cost and Freight):
The seller pays the cost and freight to bring the goods to the port of destination. Risk passes once the goods are on board the ship. - CIF (Cost, Insurance and Freight):
Like CFR, but the seller also provides insurance for the goods during transit.