Glossary

Incoterms, also known as International Commercial Terms, are a set of standardized rules established by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international trade transactions. They outline crucial aspects such as transportation costs, risk ownership, and the point at which the responsibility for goods transfers from the seller to the buyer

The current version of Incoterms is Incoterms 2020, which was published in September 2020. Incoterms 2020 includes 11 terms, which are divided into two groups:

• E-terms: These terms apply to any mode of transportation.
• F-terms: These terms apply to any mode of transportation, but the seller is not responsible for arranging carriage to the named place of destination.

The following is a brief overview of each Incoterm:

• EXW (Ex Works): The seller is only responsible for delivering the goods to the buyer's premises. The buyer is responsible for all costs and risks associated with loading the goods and transporting them to their final destination.
• FCA (Free Carrier): The seller is responsible for delivering the goods to a carrier nominated by the buyer. The buyer is responsible for all costs and risks associated with loading the goods onto the carrier and transporting them to their final destination.
• FAS (Free Alongside Ship): The seller is responsible for delivering the goods alongside the ship at the named port of shipment. The buyer is responsible for all costs and risks associated with loading the goods onto the ship and transporting them to their final destination.
• FOB (Free on Board): The seller is responsible for delivering the goods on board the ship at the named port of shipment. The buyer is responsible for all costs and risks associated with transporting the goods from the ship to their final destination.
• CFR (Cost and Freight): The seller is responsible for paying the costs and freight necessary to bring the goods to the named port of destination. The buyer is responsible for all costs and risks associated with unloading the goods from the ship and transporting them to their final destination.
• CIF (Cost, Insurance and Freight): The seller is responsible for paying the costs, insurance and freight necessary to bring the goods to the named port of destination. The buyer is responsible for all costs and risks associated with unloading the goods from the ship and transporting them to their final destination.
• CPT (Carriage Paid To): The seller is responsible for paying the carriage costs necessary to bring the goods to the named place of destination. The buyer is responsible for all costs and risks associated with unloading the goods from the carrier and transporting them to their final destination.
• CIP (Carriage and Insurance Paid To): The seller is responsible for paying the carriage costs and insurance necessary to bring the goods to the named place of destination. The buyer is responsible for all costs and risks associated with unloading the goods from the carrier and transporting them to their final destination.
• DAP (Delivered at Place): The seller is responsible for delivering the goods to the buyer's premises at the named place of destination. The buyer is responsible for all costs and risks associated with unloading the goods from the carrier and transporting them to their final destination.
• DDP (Delivered Duty Paid): The seller is responsible for delivering the goods to the buyer's premises at the named place of destination, including all costs, risks and duties associated with the import of the goods.

Incoterms are an important tool for international trade, as they help to clarify the responsibilities of buyers and sellers and to reduce the risk of disputes. They are also used by banks and insurers to assess the risk of a particular transaction.

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