The International Commercial Terms (Incoterms)
are a standard recognized and used worldwide in international contracts for the sale of goods in Commercial Terms.
Below we will try to present and briefly explain the meanings of some of the most famous Incoterms.
Costs from seller to buyer based on each Incoterms.
Ex-works (EXW) is one of the most basic shipping contracts between seller and buyer. Based on these commercial terms, the seller simply has to make the goods available in his factory or warehouse so that the buyer can take them over to fulfill his obligations. All costs and risks of international transport, including export customs clearance and insurance, are therefore borne by the buyer.
Free Carrier (FCA)
With the Free Carrier (FCA) commercial terms, the seller must deliver the cargo to the carrier appointed by the buyer. In practical terms, it means that the seller is responsible for both transportation to the shipper's warehouse and for customs clearance of the cargo, while the importer is responsible for all costs from that point on, including any origin charges.
Free On Board (FOB)
Free on board (FOB) is a widely used Incoterm in which the costs and risks of the goods pass from the seller to the buyer when the load has passed the ship's track in the indicated loading port. The seller has therefore fulfilled his obligations and the buyer assumes all costs and risks of loss or damage to the goods from that point on.
Cost, Insurance, And Freight (CIF)
The commercial terms Cost, Insurance, And Freight (CIF) are similar to the CNF, except that in this case the seller is also responsible for cargo insurance.
Delivered at Place Unloaded (DPU)
Delivered at Place Unloaded (DPU) means that the seller pays for transportation to the destination terminal. This means that the seller pays both for the transport and for any expenses at the destination, but not for the customs clearance, which is borne by the buyer.
Delivered At Place (DAP)
For Delivered At Place (DAP) - previously known as Delivered Duty Unpaid (DDU) - the seller is responsible for delivering the goods to the buyer in the agreed place, and the buyer is responsible only for the organization and payment for customs clearance and any customs duties at the destination.