Incoterms
Also known as: International Commercial Terms, Trade Terms, Shipping Terms
Definition
Incoterms are standardized trade terms published by the International Chamber of Commerce (ICC) that define who pays for shipping, who bears risk during transit, and who handles customs. They’re essential for international trade contracts.
Common Incoterms 2020
| Term | Risk Transfer | Seller Pays |
|---|---|---|
| EXW | At seller’s premises | Nothing |
| FOB | When on vessel | To port, loading |
| CIF | When on vessel | Freight + insurance |
| DAP | At destination | All transport |
| DDP | At destination | Everything incl. duties |
Incoterms Categories
E Terms: Seller’s premises
- EXW (Ex Works)
F Terms: Main carriage unpaid
- FCA, FAS, FOB
C Terms: Main carriage paid
- CFR, CIF, CPT, CIP
D Terms: Arrival
- DAP, DPU, DDP
Choosing the Right Incoterm
Seller preference: EXW, FOB (less responsibility) Buyer preference: DDP (seller handles everything) Balanced: DAP, CIF
Why Incoterms Matter
- Clear cost allocation
- Defined risk transfer point
- Insurance responsibility
- Customs obligations
- Dispute prevention
Ready to ship?
Ship internationally with confidence
Try Free