INCOTERMS

Definition

‘Incoterm’ is an acronym for International Commercial Terms. The purpose of Incoterms is to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade and to avoid the uncertainties of different interpretations of different countries.

Incoterms are purely in place to keep order with the agreement between the shipper and consignee for cost, responsibility, risk of loss or damages to cargo.

CFR Freight Incoterms graph

Incoterms Explained

  • Ex works is when the seller places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.). 
  • The seller does not need to load the goods on any collecting vehicle. Nor does it need to clear them for export, where such clearance is applicable. 
  • The seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place. 
  • The parties are well advised to specify as explicitly as possible the point within the named place of delivery, as the risk passes to the buyer at that point. 
  • The seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment. 
  • The risk of loss of or damage to the goods passes when the products are alongside the ship.  The buyer bears all costs from that moment onwards. 
  • The parties are well advised to specify as explicitly as possible the point within the named place of delivery, as the risk passes to the buyer at that point. 
  • The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. 
  • The risk of loss of or damage to the goods passes when the products are on board the vessel.  The buyer bears all costs from that moment onwards.
  • The seller delivers the goods on board the vessel or procures the goods already so delivered. 
  • The risk of loss of or damage to the goods passes when the products are on board the vessel. 
  • The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. 
  • The seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the products are on the ship. 
  • The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. 
  • The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. 
  • The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.
  • The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such site is agreed between parties). 
  • The seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination. 
  • The seller has the same responsibilities as CPT, but they also contract for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. 
  • The buyer should note that under CIP the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.
  • The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination.
  • The seller bears all risks involved in bringing the goods to the named place.
  • DPU replaces the former Incoterm® DAT (Delivered At Terminal).  The seller delivers when the goods, once unloaded are placed at the disposal of the buyer at a named place of destination. 
  • The seller bears all risks involved in bringing the goods to, and unloading them at the named place of destination. 
  • The seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination.
  • The seller bears all the costs and risks involved in bringing the goods to the place of destination.  They must clear the products not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.