Incoterms
Discover the most suitable Incoterm for your international transportation needs.
What is an Incoterm?
Incoterms, short for International Commercial Terms, are a set of standardised rules published by the International Chamber of Commerce (ICC) used to clearly define the responsibilities of the seller and buyer during international commercial transactions.
These terms specify the delivery conditions, risk transfer, and costs associated with the transportation and delivery of goods.
Incoterms provide a common and uniform basis for international trade transactions, reducing misunderstandings and disputes among the parties involved.
They are essential for clearly determining the responsibilities and costs associated with the delivery of goods and ensuring proper management of import-export operations.
How to use Incoterms
It is crucial to choose the appropriate Incoterm based on the specific needs of each commercial transaction and ensure that the conditions are clearly specified in the sales contract.
Understanding and correctly using Incoterms can help avoid misunderstandings and disputes and ensure proper management of international commercial operations.
Incoterms 2020
Understanding the different types of Incoterms is essential for ensuring proper management of commercial operations.
Each Incoterm has different implications for the transfer of responsibilities, risks, and costs.
It is important to select the one that best suits the specific needs of each commercial transaction.
Here is an overview of the main types of Incoterms:
EXW (Ex Works)
EXW implies that the seller makes the goods available at their premises or warehouse, and all transportation costs and risks are borne by the buyer.
FCA (Free Carrier)
With Free Carrier, the seller delivers the goods to the carrier designated by the buyer at a specified place, and from that moment, the seller's responsibilities end.
FAS (Free Alongside Ship)
With FAS, the seller delivers the goods alongside the ship at the designated port of shipment, with the buyer responsible for loading onto the ship.
FOB (Free On Board)
Using the FOB Incoterm, the seller delivers the goods on board the ship at the designated port of shipment, with responsibilities transferring to the buyer upon loading.
CFR (Cost and Freight)
With CFR, the seller is responsible for delivering the goods on board the ship at the designated destination port and paying for maritime transport up to that point.
CIF (Cost, Insurance and Freight)
With CIF, the seller is responsible for delivering the goods on board the ship at the designated destination port and paying for maritime transport and insurance up to that point.
CPT (Carriage Paid To)
With CPT, the seller is responsible for delivering the goods to the designated carrier and paying for transport to the agreed destination.
CIP (Carriage and Insurance Paid To)
With CIP, the seller is responsible for delivering the goods to the designated carrier and paying for transport and insurance to the agreed destination.
DAP (Delivered at Place)
With DAP, the seller is responsible for delivering the goods to the agreed destination place but does not clear the goods for importation.
DPU (Delivered at Place Unloaded)
With DPU, the seller is responsible for delivering the goods to the agreed destination place and unloading.
DDP (Delivered Duty Paid)
With DDP, the seller is responsible for delivering the goods to the agreed destination place, clearing them for importation, and paying all customs duties and taxes.
Terms of delivery: Additional Options
In addition to the official Incoterms, given their increasingly widespread use by customers, it is worth mentioning the possibility of adopting some variants:
DAP Cleared (Delivered at Place Cleared)
With the DAP Cleared variant, the seller is responsible not only for delivering the goods to the agreed destination place but also for clearing the goods for importation into the destination country.
Thus, the seller handles all the necessary customs formalities to allow the entry of goods into the destination country.
DPU Cleared (Delivered at Place Unloaded Cleared)
With the DPU Cleared variant, the seller is responsible not only for delivering the goods to the agreed destination place but also for clearing the goods for importation into the destination country.
Thus, the seller handles all the necessary customs formalities to allow the entry of goods into the destination country.
DDP Excluding VAT (Delivered Duty Paid Excluding Value Added Tax)
With the DDP Excluding VAT variant, the seller is responsible for paying all expenses, including customs duties and other taxes, but excludes VAT from the agreed price.
In this case, VAT is the buyer's responsibility and must be paid separately once the goods have arrived in the destination country.
Speak with an Incoterms Expert
To maximise your understanding of Incoterms and optimise your international commercial transactions, consult our experts in logistics and international transport.