What are Incoterms?
Incoterms refer to International Commercial Terms published by the International Chamber of Commerce (ICC) and they are pre-defined terms that the seller and buyer agree to during international transactions. Incoterms are a set of 11 internationally recognised rules that define the responsibilities both the sellers and buyers have. Incoterms make it clear who is responsible for paying and managing the shipment of goods, insurance, documents, customs clearance, and other logistics.
The below diagram and definitions should help guide you through them, but for any further help and advice, don’t hesitate to contact us directly. Our dedicated team can offer a complete end-to-end managed freight forwarding service which handles all requirements from the moment goods leave a manufacturer to after they’ve arrived safely at their destination.
Incoterms for ANY mode of transport
EXW – Ex Works
The seller makes the goods available for the buyer to pick up at its premises or at another named location at an agreed-upon date and time. The buyer bears all the risks and costs from the point where the goods become available to the buyer from the seller’s location.
FCA – Free Carrier
The seller is responsible for making the goods available at their premises or at another named location. The seller is responsible for loading their goods onto the buyer’s transport, the seller is also responsible for the delivery to the port and export clearance, which includes security requirements. The risk changes once the goods have been loaded onto the buyer’s transport.
CPT – Carriage Paid To
The seller clears the goods for export and then delivers them to the carrier at a named shipment location. The seller is responsible for the costs of international transportation for delivering goods into a named foreign destination. The risk is transferred from the seller to the buyer once the goods have been delivered to the international carrier.
CIP – Carriage and Insurance Paid To
The seller clears the goods ready for export and delivers them to the carrier at a named shipment location, where the risk changes over to the buyer. The sellers responsibility lies with the transportation costs of delivering the goods as well as the insurance coverage to the named destination.
DAP – Delivered at Place
The seller clears the goods ready for export and is responsible for all the risks and costs for delivering the goods to the named foreign location unloaded. The buyer is then responsible and bears the risks and costs involved in unloading the goods and clearing customs so the goods can be imported into the named country.
DPU – Delivered at Place Unloaded
DPU used to be named DAT (Delivered at Terminal). Unlike with DAP, the seller must pay for the unloading of goods. The risks follow the same as DAP, with the seller clearing the goods for export and bearing the risks and costs involved in delivering the goods to the named foreign location. The buyer then bears the risks and costs involved in clearing customs so the goods can be imported into the named country.
DDP – Delivered Duty Paid
The seller is responsible for all the risks and costs involved in delivering the goods to the named location, where they’re ready for unloading and cleared for import.
Incoterms for SEA and INLAND WATERWAY transport
FAS – Free Alongside Ship
The seller has the goods cleared for export and delivers them where they are put alongside the vessel at the named shipment port. Once they arrive at the port of shipment, the buyer is responsible for all the risks and costs involved.
FOB – Free on Board
The seller has the goods cleared for export and delivers them where they are placed on board the vessel at the named shipment port. Once they arrive at the port of shipment, the buyer is responsible for all the risks and costs involved.
CFR – Cost and Freight
The seller has the goods cleared for export and delivers them where they are placed on board the vessel at the named shipment port. The seller is responsible for the cost of the freight to the named port location. Once they arrive at the port of shipment, the buyer is responsible for all the risks and costs involved.
CIF – Cost, Insurance and Freight
The seller has the goods cleared for export and delivers them where they are placed on board the vessel at the named shipment port. The seller is responsible for the cost of the freight and insurance to the named port location. The seller must purchase the minimum level of insurance under Class C of the Insurance Cargo Clauses.
Once the goods arrive at the port of shipment, the buyer is responsible for all the risks and costs involved.
Experts in Incoterms
Alisped is your source for expert freight forwarding services and a trusted partner in international trade. As a logistics provider, we understand the complexities of shipping goods around the world, and we’re dedicated to providing our customers with the best possible service.
One important aspect of international trade that we specialise in is the use of Incoterms. Incoterms are a set of standard terms and conditions established by the International Chamber of Commerce (ICC) which defines the responsibilities of buyers and sellers for the transportation of goods. These terms outline the different types of shipping arrangements, such as whether the seller or the buyer is responsible for loading the goods onto the shipping vessel, and who pays for freight and insurance.
We can provide freight forwarding services for all the Incoterms, such as:
EXW – Ex Works, where the seller makes the goods available at their premises
FOB – Free on Board, where the seller delivers the goods on board the shipping vessel
CIF – Cost, Insurance and Freight, where the seller is responsible for the cost of freight and insurance
DDP – Delivered Duty Paid, where the seller is responsible for all costs and risks until the goods are delivered to the buyer
By utilising these Incoterms, Alisped helps customers to reduce confusion, avoid misunderstandings and ensure that their transactions are completed smoothly and efficiently. We are well-versed in the details of these terms and we will help you navigate through them and make sure that your goods are shipped and delivered as specified in your contract.
We can provide you with a full range of logistics services that include the handling of documentation, customs clearance, container shipping, air freight, warehousing and storage and complete end-to-end delivery of goods. Contact us today to learn more about how we can help you with your freight forwarding needs.
