Shipping Incoterms
Incoterms (International Commercial Terms) are standardized trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international trade. Understanding these terms is crucial for successful global commerce and helps clarify who pays for what, who handles the goods at each stage, and who bears the risk of loss or damage.
Incoterms that can be used for any mode of transport including sea, air, rail, and road.
Incoterms specifically designed for sea and inland waterway transport.
Understanding delivery points and transfer of risk in international trade.
Seller's Responsibility: Minimal. Goods are made available at seller's premises.
Buyer's Responsibility: All costs and risks from seller's premises to destination.
Risk Transfer: When goods are made available to buyer at seller's premises.
Seller's Responsibility: Deliver goods to carrier or person nominated by buyer.
Buyer's Responsibility: All costs and risks after delivery to carrier.
Risk Transfer: When goods are delivered to carrier at named place.
Seller's Responsibility: Pay freight to named destination, deliver to carrier.
Buyer's Responsibility: Risk from delivery to carrier, costs after arrival.
Risk Transfer: When goods are delivered to carrier.
Seller's Responsibility: Pay freight and insurance to named destination.
Buyer's Responsibility: Risk from delivery to carrier, costs after arrival.
Risk Transfer: When goods are delivered to carrier.
Seller's Responsibility: Deliver goods to named destination, ready for unloading.
Buyer's Responsibility: Unload goods and handle import clearance.
Risk Transfer: When goods are ready for unloading at destination.
Seller's Responsibility: Deliver and unload goods at named destination.
Buyer's Responsibility: Import clearance and all costs after unloading.
Risk Transfer: When goods are unloaded at destination.
Seller's Responsibility: Maximum responsibility including import duties and taxes.
Buyer's Responsibility: Minimal - only unloading and handling after delivery.
Risk Transfer: When goods are ready for unloading at destination.
Seller's Responsibility: Deliver goods alongside ship at named port.
Buyer's Responsibility: All costs and risks from alongside ship.
Risk Transfer: When goods are placed alongside ship.
Seller's Responsibility: Deliver goods on board vessel at named port.
Buyer's Responsibility: All costs and risks from on board vessel.
Risk Transfer: When goods pass ship's rail at loading port.
Seller's Responsibility: Pay freight to named port, deliver on board.
Buyer's Responsibility: Risk from on board vessel, insurance.
Risk Transfer: When goods pass ship's rail at loading port.
Seller's Responsibility: Pay freight and insurance to named port.
Buyer's Responsibility: Risk from on board vessel, import costs.
Risk Transfer: When goods pass ship's rail at loading port.
| Incoterm | Mode of Transport | Risk Transfer | Export Clearance | Import Clearance | Insurance |
|---|---|---|---|---|---|
| EXW | Any | Seller's premises | Buyer | Buyer | Buyer |
| FCA | Any | Carrier | Seller | Buyer | Buyer |
| CPT | Any | Carrier | Seller | Buyer | Buyer |
| CIP | Any | Carrier | Seller | Buyer | Seller |
| DAP | Any | Destination | Seller | Buyer | Seller |
| DPU | Any | Destination (unloaded) | Seller | Buyer | Seller |
| DDP | Any | Destination | Seller | Seller | Seller |
| FAS | Sea/Inland | Alongside ship | Seller | Buyer | Buyer |
| FOB | Sea/Inland | On board vessel | Seller | Buyer | Buyer |
| CFR | Sea/Inland | On board vessel | Seller | Buyer | Buyer |
| CIF | Sea/Inland | On board vessel | Seller | Buyer | Seller |
Consider who should bear the risk of loss or damage to goods during transit. This affects insurance requirements and liability.
Determine who pays for transportation, insurance, customs duties, and other costs associated with the shipment.
Understand which party is responsible for export and import documentation and customs clearance procedures.
Choose incoterms appropriate for your transport mode - some are specific to sea transport while others work for any mode.
Consider the nature of your business relationship and each party's experience with international trade procedures.
Consider industry standards and market practices in your specific trade route and commodity sector.