The international rules that define buyer and seller responsibilities in global trade.
Incoterms® are a set of 11 rules set by the International Chamber of Commerce (ICC) which spell out the responsibilities of sellers and buyers for the sale of goods in international transactions.
They set out who arranges and pays for transport, insurance and customs clearance, and the point at which the risk for the goods passes from the seller to the buyer. The current version is Incoterms® 2020.
We’ve put together a short video to help you familiarise yourself with the right Incoterms® for you and your specific supply chain.
Which side books and pays for the transport, loading, unloading and insurance.
The point at which responsibility for the goods passes from the seller to the buyer.
Whether export and import clearance, duties and taxes sit with the seller or the buyer.
| Code | Rule | In short |
|---|---|---|
| EXW | Ex Works | The seller makes the goods available at its own premises. The buyer arranges and pays for everything from there, including loading, export and import clearance and the main carriage. |
| FCA | Free Carrier | The seller clears the goods for export and hands them to the carrier named by the buyer, at a named place. The buyer pays for the main carriage. |
| CPT | Carriage Paid To | The seller pays for carriage to a named destination. Risk passes to the buyer when the goods are handed to the first carrier. |
| CIP | Carriage and Insurance Paid To | As CPT, but the seller also arranges insurance for the buyer. |
| DAP | Delivered at Place | The seller delivers the goods to a named destination, ready to be unloaded, and carries the risk until then. The buyer handles import clearance. |
| DPU | Delivered at Place Unloaded | As DAP, but the seller also unloads the goods at the named destination. |
| DDP | Delivered Duty Paid | The seller carries all costs and risk to the named destination, including import clearance, duties and taxes. |
| Code | Rule | In short |
|---|---|---|
| FAS | Free Alongside Ship | The seller delivers when the goods are placed alongside the vessel at the named port of shipment. The buyer carries the risk from there. |
| FOB | Free On Board | The seller delivers the goods on board the vessel named by the buyer at the port of shipment. Risk passes once they are on board. |
| CFR | Cost and Freight | The seller pays the cost of freight to the named port of destination. Risk passes to the buyer once the goods are on board at the port of shipment. |
| CIF | Cost, Insurance and Freight | As CFR, but the seller also arranges insurance for the buyer. |
For containerised cargo, the ICC recommends the rules for any mode of transport rather than the sea-only rules. Not sure which one fits your shipment? Your account manager can talk you through it.
Incoterms® (International Commercial Terms) are a set of rules published by the International Chamber of Commerce (ICC). They set out the responsibilities of sellers and buyers in international sales, such as who arranges and pays for transport, insurance and customs clearance, and when the risk passes from seller to buyer.
There are 11 rules in the current version, Incoterms® 2020. Seven can be used for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU and DDP) and four are for sea and inland waterway transport only (FAS, FOB, CFR and CIF).
It depends on the goods, the mode of transport and how much of the shipment each side wants to control. For containerised cargo, the ICC recommends the rules for any mode of transport rather than the sea-only rules. Your account manager can help you choose.
They sit at opposite ends. Under EXW (Ex Works) the seller simply makes the goods available at its premises and the buyer arranges and pays for almost everything else. Under DDP (Delivered Duty Paid) the seller carries the transport, risk, import clearance, duties and taxes to the named destination.
It depends on the rule. In most, the seller handles export clearance and the buyer handles import clearance. The main exceptions are EXW, where the buyer also handles export clearance, and DDP, where the seller also handles import clearance. We handle UK customs clearance in house.
No. Incoterms deal with delivery, costs and risk. They do not cover payment terms, the transfer of ownership or what happens if the contract is breached, so these should be agreed separately in the sales contract.
They apply when you include them in your sales contract. Always state the rule, the named place and the version, for example “FCA London, Incoterms® 2020”.
Yes. Tell your account manager what you ship and where it is going, and we will talk you through the options.