Incoterms

CPT

Carriage Paid To... (named places); Like CFR, but not restricted to maritime use; seller delivers into custody of carrier, pays freight to point of destination.

CIP

Carriage and Insurance Paid to...(named place); Like CPT, but seller must procure insurance policy for 110% of the value of the goods; suitable for all modes of transport.

CFR

Cost and Freight; Cost and Freight; seller must deliver the goods onto the designated vessel in the port of loading, and pay the freight to the port of destination. Exclusively for maritime shipment.

CIF

Cost, Insurance and Freight; Like CFR, but seller must also procure an insurance policy for 110% of the value of the goods for the buyer. The insurance required is minimum and does not cover losses by pilferage nor damages resulting from strikes or war (although the parties may agree to have more complete insurance). Exclusively for maritime shipment.

DDP

Delivered Duty Paid; seller fully responsible until goods are delivered at the named place in the country of destination (seller must pay any import duties).

DDU

Delivered Duty Unpaid; seller fully responsible until goods are delivered at the named place in the country of destination; however, buyer is responsible for import customs clearance (the seller does not have to pay any import duties).

DEQ

Delivered Ex Quay; seller fully responsible until goods are discharged onto the quay in the port of destination; import customs clearance is for buyer. Exclusively for maritime shipment.

DES

Delivered Ex Ship; seller fully responsible until goods arrive on board vessel in the port of destination; import customs clearance is for buyer. Exclusively for maritime shipment.

DAF

Delivered at Frontier; all responsibilities evenly split at delivery point on border between two countries (generally road/rail transport).

transfer of risk

Each Incoterm also has a transfer of risk point; if the goods are damaged or lost before the transfer of risk point, the seller is responsible. After that point, the buyer is responsible.

EXW

Ex works; minimum responsibility on the part of the seller; seller must make the goods available at his place of business or any other point named in the contract; buyer has to arrange for all transport and customs clearance; seller is not required to load the goods, but usually does so anyway.

FAS

Free Alongside Ship; seller delivers the goods on the quay alongside the designated sea vessel; exclusively a maritime term; seller must clear goods for export.

FCA

Free Carrier; seller must deliver the goods, cleared for export, into the custody of the carrier arranged by the buyer. Buyer pays for the main international transport. Used for all modes of transport.

FOB

Free on Board; transfer of risk occurs when the goods pass the ship's rail. Seller takes care of export clearance, buyer takes care of transport and import clearance. Exclusively a maritime term.

transportation costs

Incoterms fix the point to which the seller is required to transport the goods; the seller is responsible for all transport costs up to that point, the buyer is responsible thereafter.

customs clearance

International trade requires goods to pass through two potential customs clearances, export and import. Depending on the Incoterm chosen, either seller or buyer will have customs clearance responsibilities.

insurance

Only two Incoterms have specific insurance requirements - CIF and CIP. The requirement is for minimum insurance coverage for a value of 110% of the price of the goods.

What are Incoterms

international standard definitions (aka "sales terms" or "delivery terms") that determine: transportation cost transfer of risk custom clearance insurance