Incoterms rules (International Commercial Terms) are an international standard on the rights and obligations of the buyer and seller in the international transport of goods, developed and published by the International Chamber of Commerce (ICC), the world business organization. The Incoterms are adjusted every 10 years.
As of 1 January 2011, buyer and seller can choose from the 11 Incoterms.
EXW, Ex Works
FCA, Free Carrier
CPT, Carriage Paid To
CIP, Carriage and Insurance Paid To
DAT, Delivered At Terminal
DAP, Delivered At Place
DDP, Delivered Duty Paid
Only for transport by sea and inland waterways:
FAS, Free Alongside Ship
FOB, Free On Board
CFR, Cost and Freight
CIF, Cost, Insurance and Freight
The factory delivers the goods by giving it to the buyer in their storage, factory or workshop. This is the incoterm with the least responsibility for the factory. The factory only takes care of the goods with invoice and the (minimum) packaging. The buyer is responsible from the collection point to the desired destination.
FCA Free Carrier
The factory takes care of all the paper required in their country. Think of: customs formalities, invoice, export license. The factory also takes care of the goods, packaging and the costs of delivering the goods to the transport company.
CPT Carriage Paid To
The factory pays for the transport of the goods to the named destination. The risk passes from factory to buyer at the moment the goods are transferred to the first carrier.
CIP Carriage and Insurance Paid To
The factory has the same obligations as with CPT. The additional obligation is that the factory must take out freight insurance for the risks during transport.
DAT Delivered at Terminal
DAT is a non-maritime condition. DAT has been created at the urgent request of the trade to bring the container terminal (yard, warehouse) to the attention. The seller has the transport in his hands. The seller now also bears the transport risk. DAT can be used for all modes of transport. **
DAP Delivered At Place
DAP is a non-maritime condition. DAP replaces the conditions DAF, DES and DDU. The seller must arrange transport to a location agreed with the buyer. The seller now also bears the transport risk. DAP can be used for all forms of transport.
DDP Delivered Duty Paid
The factory fulfills its obligation to deliver by making the goods available at the place mentioned in the importing country. The factory takes all costs and risks for transport, with the exception of duties, taxes and other import duties.
FAS Free Alongside Ship
The factory handles goods with invoice, packaging and costs up to the ship with export license. The factory clears the goods and from here the buyer takes all the risks and costs.
FOB Free on Board
This term is most often used. The factory handles the goods with invoice, packaging, export license and local customs formalities. The factory runs for all costs until the goods are on the vessel. From here on the buyer takes all risks and costs. From INCOterms 2011: Goods are only "on board" when the goods have been loaded and lashed appropriate to the load and the captain has signed for receipt, in other words holds the stowage certificate.
CFR (CNF) Cost and Freight
The factory is coming up for the costs and transport up to the destination port. However, the buyer is responsible for the risks from the moment the goods pass the ship's rail at the shipping port.
CIF Cost, Insurance and Freight
CIF means that the factory has the same obligations as with CFR. However, there is also an extra obligation; the factory pays the insurance for sea freight. This term can only be used for maritime transport and inland shipping traffic.