Incoterms
When negotiating an international sales contract, both parties need to pay as much attention to the terms of sale as to the sal es price. To make it as clear as possible, an international set of trade terms (INCOTERMS) has been adopted by most countries that defines exactly the responsibilities and risks of both the buyer and seller including while the merchandise is in transit.
The following chart summarizes the responsibilities of both the buyer and seller for each of the current 13 INCOTERMS. In addition, a definition for each term is included at the bottom of the page.
| EXW | FCA | FAS | FOB | CFR | CIF | CPT | CIP | DAF | DES | DEQ | DDU | DDP | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SERVICES | Ex Works | Free Carrier | Free Alongside Ship | Free Onboard Vessel | Cost & Freight | Cost Insurance & Freight | Carriage Paid To | Carriage Insurance Paid To | Delivered At Frontier | Delivered Ex Ship | Delivered Ex Quay Duty Unpaid | Delivered Duty Unpaid | Delivered Duty Paid |
| Warehouse Storage | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Warehouse Labor | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Export Packing | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Loading Charges | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Inland Freight | Buyer | Buyer/ Seller* | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Terminal Charges | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Forwarder's Fees | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Loading On Vessel | Buyer | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Ocean/Air Freight | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Charges On Arrival At Destination | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Buyer | Buyer | Seller | Seller | Seller |
| Duty, Taxes & Customs Clearance | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller |
| Delivery To Destination | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller | Seller |
* There are actually two FCA terms: FCA Seller’s Premises where the seller is responsible only for loading the goods and not responsible for inland freight; and FCA Named Place (International Carrier) where the seller is responsible for inland freight.
EXW
Ex-Works, named place where shipment is available to the buyer, not loaded. The seller will not contract for any transportation.
FCA
Free Carrier, unloaded at the seller’s dock OR a named place where shipment is available to the international carrier or agent, not loaded. This term can be used for any mode of transport.
FAS
Free Alongside Ship, named ocean port of shipment. Ocean shipments that are NOT containerized.
FOB
Free On Board vessel, named ocean port of shipment. This term is used for ocean shipments only where it is important that the goods pass the ship’s rail.
CFR
Cost and Freight, Named ocean port of destination. This term is used for ocean shipments that are not containerized.
CIF
Cost, Insurance and Freight, named ocean port of destination. This term is used for ocean shipments that are not containerized.
CPT
Carriage Paid To, named place or port of destination. This term is used for air or ocean containerized and roll-on roll-off shipments.
CIP
Carriage and Insurance Paid To, named place or port of destination. This term is used for air or ocean containerized and roll-on roll-off shipments.
DAF
Delivered At Frontier, named place of destination, by land, not unloaded. This term is used for any mode of transportation but must be delivered by land.
DES
Delivered Ex-Ship, named port of destination, not unloaded. This term is used for ocean shipments only.
DEQ
Delivered Ex-Quay, named port of destination, unloaded, not cleared. This term is used for ocean shipments only.
DDU
Delivered Duty Unpaid, named place of destination, not unloaded, not cleared. This term is used for any mode of transportation.
DDP
Delivered Duty Paid, named place of destination, not unloaded, cleared. This term is used for any mode of transportation.