What are Incoterms?
International Commercial Terms, or Incoterms, are a set of 11 global trade rules established by the International Chamber of Commerce (ICC) that define the responsibilities of sellers and buyers for the international sale of goods.
Updates every ten years by the ICC, Incoterms are recognized by trade bodies, courts, and lawyers and serve as a universal language for defining sales agreements. Incoterms specify which party (seller or buyer) are responsible for costs, tasks, and risks associated with international transportation and delivery of goods.
The 11 Incoterms are divided into two categories based on the mode of transport for the sold goods. Seven of the terms apply to any mode of transportation, while the other four only apply to sea, land, or inland waterway transport.
The 7 Incoterms 2020 rules for any mode(s) of transport:
- EXW - Ex Works ( place of delivery)
- FCA - Free Carrier ( named place of delivery)
- CPT - Carriage Paid to ( place of destination)
- CIP - Carriage and Insurance Paid to ( place of destination)
- DAP - Delivered at Place ( named place of destination)
- DPU - Delivered at Place Unloaded ( of place of destination)***
- DDP - Delivered Duty Paid ( place of destination)
***The DPU Incoterms replaces the old DAT
The 4 Incoterms 2020 rules for Sea and Inland Waterway transport:
- FAS - Free Alongside Ship (name of port of loading)
- FOB - Free on Board (named port of loading)
- CFR - Cost and Freight (named port of destination)
- CIF - Cost Insurance and Freight (named port of destination)
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