Incoterms

Incoterms 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.

• EXW – Ex Works

This term represents the seller's minimum obligation, since he only has to place the goods at the disposal of the buyer. The buyer must carry out all tasks of export & import clearance. Carriage & insurance is to be arranged by the buyer. Title and risk pass to buyer including payment of all transportation cost from the seller's door. Used for any mode of transportation.

• FCA – Free Carrier

This term means that the seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. Seller pays for carriage to the named place. Title and risk pass to buyer including transportation 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.

• FAS – Free Alongside Ship 

This term means that the seller delivers when the goods are placed alongside the vessel at the named port of shipment. The seller is required to clear the goods for export. The buyer has to bear all costs & risks of loss or damage to the goods from that moment. Title and risk pass to buyer including payment of all transportation 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

This term means that the seller delivers when the goods pass the ship's rail at the named port of shipment. This means the buyer has to bear all costs & risks to the goods from that point. The seller must clear the goods for export. If the parties do not intend to deliver the goods across the ship's rail, the FCA term should be used. Free On Board and risk pass to buyer including payment of all transportation cost once delivered on board the ship by the seller. Used for sea or inland waterway transportation.

• CIF – Cost, Insurance and Freight

The seller delivers when the goods pass the ship's rail in the port of shipment. Seller must pay the cost & freight necessary to bring goods to named port of destination. Risk of loss & damage same as CFR. Seller also has to procure marine insurance against buyer's risk of loss/damage during the carriage. Seller must clear the goods for export. 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.

• CFR – Cost and Freight

This term means the seller delivers when the goods pass the ship's rail in the port of shipment. Seller must pay the costs & freight necessary to bring the goods to the named port of destination, BUT the risk of loss or damage, as well as any additional costs due to events occurring after the time of delivery are transferred from seller to buyer. Seller must clear goods for export. 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.

• Ddu – Delivered duty unpaid

This term means the seller delivers the goods to the buyer, not cleared for import, and not unloaded from arriving means of transport at the named place of destination. The seller bears all costs & risks involved in bringing the goods to the named place other than "duty" (which includes the responsibility for customs formalities & payment of those formalities, duties & taxes) for import into the country of destination. Buyer is responsible for payment of all customs & duties & taxes.

• DDP – Delivered Duty Paid

This term represents maximum obligation to the seller. This term should not be used if the seller is unable to directly or indirectly to obtain the import license. The terms means the same as the DDU term with the exception that the seller also will bear all costs & risks of carrying out customs formalities including the payment of duties, taxes & customs fees. Title and risk pass to buyer when seller delivers goods to named destination point cleared for import. Used for any mode of transportation. 

• DAP – Delivered at place (named place of destination)

Seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer. Title and risk pass to buyer when seller delivers goods to named destination point cleared for import. Used for any mode of transportation. 

Shipping Related U.S. Government SITES