Incoterms | Full Guide

here, you’ll find everything you need to know about Incoterms and figure out which one is better for you.

Incoterms Knowleg base


The Incoterms are the seven rules that define the terms of sale for international cargo.

The seven Incoterms for any mode of transport are:

CFR (Carriage Fulfilled by Road), CPT (Carriage Paid To), DAF (Delivered at Frontier), DAT (Delivered at Terminal), DDP (Delivered Duty Paid), DDU (Delivered Duty Unpaid) and FAS (Free Alongside Ship).

There are some situations where Incoterms won’t help. Incoterms do not:

Talk about all the terms of a sale.
list the goods being sold and the price of the contract.
Refer to the way and time of payment that the seller and buyer agreed on.
When the buyer becomes the owner of the goods, or “takes title” of them from the seller.
Indicate which documents the seller must give to the buyer in order to help the buyer clear customs in his or her country.
Address who is responsible if the goods don’t match the contract of sale, if delivery is late, or if there are other problems.

The biggest benefit of using Incoterms is that it makes complicated parts of international trade more standard and clear. Having a system that gets rid of ambiguity between countries has made trading and negotiating terms much easier. This saves time and money that would have been spent on lawyers who used to write up terms that were basically just Incoterms written in a different language.

One big problem with Incoterms is that buyers and sellers will have different ideas about how they should be used. For instance, sellers might choose CIF because they know more about their shipments than buyers do. On the other hand, the buyer may choose FOB for the same reasons. But the terms themselves are not the problem. Instead, it’s more about negotiating which terms to use than about how clear the terms are.

There are 11 Incoterms: Ex Works (EXW), Free Carrier (FCA), Carriage Paid To (CIP), Carriage Paid To and Insurance Paid To (CIP), Delivered at Place (DAP), Delivered at Place Unloaded (DPU), Delivered Duty Paid (DDP), Free Alongside Ship (FAS), Free on Board (FOB), Cost and Freight (CFR), and Cost, Insurance, and Freight (CIF) (CIF).

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