Information

Incoterms

INCO Terms are internationally accepted commercial terms defining the respective roles of the buyer and seller in the arrangement of transportation and other responsibilities, and clarify when the ownership of the merchandise takes place. They are used in conjunction with a sales agreement or other method of transacting the sale. Below is an example of how INCO Terms work in action. The definitions provided here are the most common uses of each term, but are not the only way these terms are used. Pay close attention to the location listed for each term, as this indicates where payment details change from Shipper to Consignee.

Note: EXW, CPT, CIP, DAF, DAP,DPU,FCA and DDP are commonly used for any mode of transportation. FAS, FOB, CFR and CIF are used for sea and inland waterway.

FAS

Free Alongside Ship

(port, after all origin port charges) Title and risk pass to buyer including payment of all transportation and insurance cost once delivered alongside ship by the seller. Used for sea or inland waterway transportation. The export clearance obligation rests with the seller.

FOB

Free On Board

(port-same as FAS) Risk pass to buyer including payment of all transportation and insurance cost once delivered on board the ship by the seller. Used for sea or inland waterway transportation.

CFR

Cost and Freight

(destination port-paid to arrival at destination port) Title, risk and insurance cost pass to buyer when delivered on board the ship by seller who pays the transportation cost to the destination port. Used for sea or inland waterway transportation.

CIF

Cost, Insurance and Freight

(destination port-same as CFR, but includes insurance) Title and risk pass to buyer when delivered on board the ship by seller who pays transportation and insurance cost to destination port. Used for sea or inland waterway transportation.

EXW

Ex Works

(factory, mill, warehouse: your door) Title and risk pass to buyer including payment of all transportation and insurance cost from the seller’s door. Used for any mode of transportation.

FCA

Free Carrier

(pick a place after your origin to start) Title and risk pass to buyer including transportation and insurance cost when the seller delivers goods cleared for export to the carrier. Seller is obligated to load the goods on the Buyer’s collecting vehicle; it is the Buyer’s obligation to receive the Seller’s arriving vehicle unloaded.

CIP

Carriage and Insurance Paid To

(place at destination-same as CPT, but includes insurance) Title and risk pass to buyer when delivered to carrier by seller who pays transportation and insurance cost to destination. Used for any mode of transportation.

CPT

Carriage Paid To

(place at destination-includes all destination port charges) Title, risk and insurance cost pass to buyer when delivered to carrier or seller who pays transportation and insurance cost to destination. Used for any mode of transportation.

DAP

Delivered at Place

The seller bears all costs and risks involved in transporting the goods to the agreed location, excluding import duties and customs clearance, which are the buyer’s responsibility. The risk transfers to the buyer once the goods are made available for unloading. Unlike DPU, the seller is not responsible for unloading the goods under DAP. This term is commonly used when the buyer wants delivery to a specific location but prefers to handle unloading.

DPU

Delivered at Place Unloaded

Requires the seller to deliver goods to an agreed location at the destination, unloaded from the transport. The seller bears all costs and risks up to that point, including export formalities, transport, and unloading. Once the goods are unloaded, the buyer assumes responsibility, including handling import formalities and further transport. DPU obligates the seller to unload, offering flexibility for delivering to non-terminal locations. This term is ideal for shipments requiring specialized unloading arrangements.

DDP

Delivered Duty Paid

Seller is responsible for delivering the goods to a specified destination, covering all costs and risks, including transport, export and import duties, and customs clearance. The seller assumes full responsibility until the goods are delivered and ready for unloading at the agreed location. This term places maximum responsibility on the seller and minimal responsibility on the buyer, making it ideal when the buyer wants a hassle-free delivery process.

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