Incoterms 2020
Incoterms (International Commercial Terms) are a set of pre-defined rules published by the International Chamber of Commerce (ICC). These terms define the responsibilities of buyers and sellers for the delivery of goods in international trade.
1. Incoterms for Any Mode of Transport (Multimodal)
EXW (Ex Works)
Seller’s Responsibility: Minimum obligation. The seller makes the goods available at their premises, and the buyer bears all costs and risks from that point onwards.
Risk Transfer: At the seller’s premises.
Buyer: Handles all transportation, export clearance, and import duties.
FCA (Free Carrier)
Seller’s Responsibility: Delivers the goods to a carrier or named place specified by the buyer. The seller clears the goods for export.
Risk Transfer: Once the goods are delivered to the carrier or place.
Buyer: Handles transport from the delivery point.
CPT (Carriage Paid To)
Seller’s Responsibility: The seller arranges and pays for transport to a named destination, but the risk transfers once the goods are handed over to the carrier.
Risk Transfer: Once goods are handed to the carrier.
Buyer: Covers costs and risks after delivery to the first carrier.
CIP (Carriage and Insurance Paid To)
Seller’s Responsibility: Similar to CPT, but the seller also covers insurance up to the named destination.
Risk Transfer: After delivery to the first carrier, but insurance covers buyer’s risk.
Buyer: Responsible for all costs after the goods arrive.
DAP (Delivered at Place)
Seller’s Responsibility: The seller delivers the goods to the buyer at a named place. The seller bears all costs and risks until the goods are delivered.
Risk Transfer: Once the goods are made available at the destination.
Buyer: Responsible for unloading and import clearance.
DPU (Delivered at Place Unloaded)
Seller’s Responsibility: The seller delivers and unloads the goods at a named place. The seller bears all costs and risks until the goods are unloaded.
Risk Transfer: After unloading at the destination.
Buyer: Handles import clearance and further transportation.
DDP (Delivered Duty Paid)
Seller’s Responsibility: Maximum obligation. The seller delivers the goods and pays all costs, including import duties.
Risk Transfer: At the final destination.
Buyer: Only responsible for unloading.
2. Incoterms for Sea and Inland Waterway Transport
FAS (Free Alongside Ship)
Seller’s Responsibility: Delivers the goods alongside the vessel at the port of shipment. The buyer arranges loading and shipping.
Risk Transfer: Once the goods are alongside the ship.
Buyer: Responsible for loading and transport.
FOB (Free on Board)
Seller’s Responsibility: Delivers the goods on board the vessel at the port of shipment.
Risk Transfer: Once the goods are loaded onto the vessel.
Buyer: Takes responsibility for transport costs after loading.
CFR (Cost and Freight)
Seller’s Responsibility: The seller pays for transport to the destination port, but the risk transfers once the goods are on board the ship.
Risk Transfer: After loading onto the vessel.
Buyer: Takes responsibility for insurance and further costs.
CIF (Cost, Insurance, and Freight)
Seller’s Responsibility: Similar to CFR, but the seller also procures marine insurance for the goods.
Risk Transfer: Once the goods are on board the ship, but insurance covers the buyer’s risk.
Buyer: Handles risks after loading.
