7 min read
Published by the International Chamber of Commerce (ICC), Incoterms set out how costs, formalities and risks are split between seller and buyer. The current version dates from 2020. They govern neither the price nor the transfer of ownership: they are delivery rules.
Rules for any mode of transport
| Incoterm | Name | The seller delivers… |
|---|---|---|
| EXW | Ex Works | by making the goods available at its premises; the buyer does everything else |
| FCA | Free Carrier | to the carrier nominated by the buyer, cleared for export |
| CPT | Carriage Paid To | to the first carrier; it pays for transport to destination |
| CIP | Carriage and Insurance Paid To | as CPT, with all-risks insurance |
| DAP | Delivered At Place | at the agreed place, goods ready to be unloaded |
| DPU | Delivered at Place Unloaded | at the agreed place, goods unloaded |
| DDP | Delivered Duty Paid | at the agreed place, import duties and taxes paid |
Rules for sea and inland waterway transport
| Incoterm | Name | The seller delivers… |
|---|---|---|
| FAS | Free Alongside Ship | alongside the vessel at the port of shipment |
| FOB | Free On Board | on board the vessel at the port of shipment |
| CFR | Cost and Freight | on board; it pays freight to the port of destination |
| CIF | Cost, Insurance and Freight | as CFR, with minimum insurance |
How to choose?
- For a container, prefer FCA over FOB: the container is handed over at the terminal before being loaded on board.
- If the buyer cannot handle export formalities, avoid EXW: FCA is a better fit.
- DDP assumes the seller can clear customs and pay taxes in the buyer's country: check this before agreeing to it.
- Always state the exact place and the version, for example “FCA Shanghai, Yangshan terminal, Incoterms 2020”.
General information given for guidance only: exact rules depend on the countries, carriers and goods. For your specific case, contact our teams.