The purpose of incoterms is to provide a set of international rules for the interpretation of the most commonly used trade term in foreign trade. Thus, the uncertainties of interpretations of such terms are mitigated.

The chart below provides a graphical representation of the key points of each incoterm.

EXW(Ex Works): Seller responsible for making the goods available at the seller’s premises.

Buyer bears the full risk from there to destination.

 

FCA(Free Carrier): Seller responsible for delivery to the custody of carrier, identified by the buyer.

Risk is transferred when loading has taken place.

 

CPT(Carriage paid to): Seller delivers goods to the carrier at agreed place of delivery and pays

transport to the named destination. Risk is transferred at place of delivery,

whereas seller pays for transport to the destination.

 

CIP(Carriage and Insurance Paid to): Seller delivers goods to carrier at agreed place of delivery and pays for transport and insurance to named destination. Risk transfers at the place of

delivery, whereas seller pays for transport and insurance to the destination.

 

DAT(Delivered at Terminal): Seller delivers goods unloaded at a specified place inside agreed terminal.

Risk is transferred as soon as goods have been unloaded.

 

DAP(Delivered at Place): Seller delivers goods to disposal of buyer on arriving means of transport, at agreed place. Seller assumes risk until goods are made ready for unloading

from the arriving means of transport.

 

DDP(Delivered Duty Paid): Seller responsible for bringing goods to the destination, paying any duty and making the goods available to buyer. Risk transfers as soon as buyer has access

to goods ready for unloading at agreed destination.

 

FAS(Free Alongside Ship): Seller is responsible for delivery of goods at quay alongside the ship. From this point onwards, risk lies with buyer.

 

FOB(Free on Board): Seller responsible for delivery of goods loaded on board the ship. Risk is transferred as soon as goods have been set down inside ship.

 

CFR, CNF(Cost and Freight): Seller covers cost of freight, duty unpaid, to named port of destination. Risk is transferred as soon as the goods have been set down inside ship.

 

CIF(Cost, Insurance and Freight): Seller covers cost of insurance and freight, duty unpaid, to named port of destination. Risk is transferred as soon as the goods have been set down

inside ship.

The most commonly used incoterms are EXW, FOB, CIF, DDU, DDP. 

 Incoterms

 Shipping from China