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Incoterms Overview
Incoterms (International Commercial Terms) are standardized trade terms that define the responsibilities of buyers and sellers in international contracts. They clarify who is responsible for shipping, insurance, duties, and risk at various stages of the transportation process.

Key Incoterms (2020)
EXW (Ex-Works)
Seller makes goods available at their premises.
Buyer assumes all risks and costs from that point.
FCA (Free Carrier)
Seller delivers goods to a carrier named by the buyer.
Risk transfers to the buyer at the point of delivery.
CPT (Carriage Paid To)
Seller pays for transport to a specified destination.
Risk transfers to the buyer once goods are handed to the carrier.
CIP (Carriage and Insurance Paid To)
Similar to CPT, but seller also provides insurance for the goods during transit.
DAP (Delivered at Place)
Seller delivers goods ready for unloading at the named destination.
Seller bears all risks and costs up to that point.
DPU (Delivered at Place Unloaded)
Seller delivers and unloads goods at the destination.
Seller covers all costs and risks until unloading.
DDP (Delivered Duty Paid)
Seller delivers goods cleared for import at the buyer's location.
Seller bears all costs including duties and risks.
Incoterms for Seaborne Freight Only
FAS (Free Alongside Ship)
Seller delivers goods alongside the vessel.
Risk transfers when goods are alongside.
FOB (Free on Board)
Seller delivers goods on board the vessel.
Risk transfers once goods are on board.
CFR (Cost and Freight)
Seller pays for transport to the destination port.
Risk transfers when goods are on board.
CIF (Cost, Insurance and Freight)
Seller pays for transport and insurance to the destination port.
Risk transfers when goods are on board.
Importance of Incoterms
Clarity: Reduces ambiguity in international trade agreements.
Risk Management: Clearly defines where risk transfers from seller to buyer.
Cost Allocation: Establishes who is responsible for shipping and insurance costs.
Usage of Incoterms
Include Incoterms in contracts to ensure all parties understand their responsibilities.
Refer to the latest version (Incoterms 2020) for current definitions and rules.
Understanding and correctly applying Incoterms is crucial for effective international trade and logistics management.