INCOTERMS

Incoterms (short for International commerce terms) are a set of standardized international trade terms that businesses use around the world to define the responsibilities of buyers and sellers in international trade transactions. The terms of Incoterms are not an international agreement, however, they are widely used in foreign economic activity and in the case of reference to the delivery basis of Incoterms in the contract, state and customs authorities, as well as courts, are required to take these provisions into account.

Here are some of the most important Incoterms for 2023:

EXW (Ex-Factory)

FCA (Free Carrier)

FAS (Free Along the Ship)

FOB (Free On Board)

CFR (Cost and Freight)

CIF (Cost, Insurance and Freight)

CPT (Carriage Paid To)

CIP (Carriage and Insurance Payment)

DAT (Delivered to Terminal)

DAP (Delivery to Place)

DDP (Delivery Duty Paid)

 The terms of Incoterms are not an international agreement, however, they are widely used in foreign economic activity and in the case of reference to the delivery basis of Incoterms in the contract, state and customs authorities, as well as courts, are required to take these provisions into account.

Incoterms terms can be divided into 4 groups.

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Group E (Shipment)

EXW (“Ex Works” named place)

The seller is obliged to provide goods ready for shipment.

The buyer is obliged to complete export and import customs clearance and deliver the goods. Risks pass when the goods are transferred to the Seller’s warehouse. The main difference is that the EXW delivery basis places minimal responsibilities on the seller.

 

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Group F (Main freight paid by buyer)

FCA (“Free Carrier” named place)

The seller is obliged to complete export customs clearance and ship the goods to the carrier appointed by the buyer.

The buyer is obliged to deliver the goods and perform import customs clearance. Risks pass at the moment the seller transfers the goods to the carrier.

FAS (“Free Alongside Ship” named port of shipment)

The seller is obliged to complete export customs clearance and place the goods at the port of shipment along the side of the vessel specified by the buyer.

The buyer is obliged to load the goods onto the ship and deliver them to the port of unloading, as well as carry out import customs clearance. Risks pass at the port when the goods are placed along the side of the ship.

FOB (“Free On Board” named port of shipment)

The seller is obliged to complete export customs clearance, deliver the goods to the port of shipment and load them on board the vessel specified by the buyer.

The buyer is obliged to deliver the goods to the port of unloading, as well as perform import customs clearance. Risks transfer on board the vessel from the moment of full loading.

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Group C (Main freight paid by seller)

CFR (“Cost and Freight” named port of destination)

The seller is obliged to complete export customs clearance, load the goods on board the vessel and deliver them to the port of unloading.

The buyer is obliged to unload and accept the goods at the port of unloading, as well as perform import customs clearance. Risks transfer on board the vessel from the moment of full loading.

CIF (“Cost, Insurance and Freight” named port of destination)

The seller is obliged to complete export customs clearance, insure, load the goods on board the ship and deliver to the port of unloading.

The buyer is obliged to unload and accept the goods at the port of unloading, as well as perform import customs clearance. Risks transfer on board the vessel from the moment of full loading.

CIP (“Carriage and Insurance Paid to” named place of destination)

The seller is obliged to complete export customs clearance, insure and deliver the goods to the agreed destination.

The buyer is obliged to unload the goods and perform import customs clearance. Risks pass at the moment the seller transfers the goods to the carrier.

CPT (“Carriage Paid To” named place of destination)

The seller is obliged to complete export customs clearance and deliver the goods to the agreed destination.

The buyer is obliged to unload the goods and perform import customs clearance. Risks pass at the moment the seller transfers the goods to the carrier.

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Group D (Delivery)

DAP (“Delivered At Point” named point of destination)

The seller is obliged to complete export customs clearance and deliver the goods to the agreed destination.

Buy You are obliged to: unload the goods and perform import customs clearance. Risks pass at destination.

DAT (“Delivered At Terminal” named terminal of destination)

The seller is obliged to: ensure the unloading of goods released under the customs export regime from the arriving vehicle and make them available to the buyer at the agreed terminal. The term “terminal” in the DAT delivery basis means any place, incl. air/auto/railway cargo terminal, pier, warehouse, etc.

DDP (“Delivered Duty Paid” named place of destination).

The seller is obliged to: complete export customs clearance, deliver the goods to the agreed destination and complete import customs clearance with payment of duties.

The buyer is obliged to: unload and accept the goods. Risks pass at destination. The DDP delivery basis places maximum responsibilities on the seller.