Incoterms -International Commercial Terms

Incoterms (International Commercial Terms) are standardized trade terms established by the International Chamber of Commerce (ICC) that outline the responsibilities of buyers and sellers in international transactions. While all Incoterms are widely used, some are particularly popular due to their versatility and simplicity. Here are the most popular Incoterms:

1. EXW (Ex Works)

  • Seller’s Responsibility: Makes goods available at their premises.
  • Buyer’s Responsibility: Handles all transportation, export, import duties, and insurance.
  • Popular Use: Frequently used when buyers want full control of the shipping process.

2. FOB (Free On Board)

  • Seller’s Responsibility: Delivers goods to the buyer’s nominated vessel at the port of origin.
  • Buyer’s Responsibility: Assumes responsibility from the moment goods are loaded onto the vessel.
  • Popular Use: Common in sea freight for bulk goods and containerized shipments.

3. CIF (Cost, Insurance, and Freight)

  • Seller’s Responsibility: Covers costs, freight, and minimum insurance to the destination port.
  • Buyer’s Responsibility: Takes over at the destination port.
  • Popular Use: Preferred for sea and inland waterway transport when sellers provide insurance.

4. DDP (Delivered Duty Paid)

  • Seller’s Responsibility: Handles all costs and risks, including import duties and taxes, to deliver goods to the buyer’s premises.
  • Buyer’s Responsibility: Minimal responsibility, only unloading.
  • Popular Use: Ideal for door-to-door delivery, often used in e-commerce and consumer goods

5. FCA (Free Carrier)

  • Seller’s Responsibility: Delivers goods to a carrier or place chosen by the buyer.
  • Buyer’s Responsibility: Takes over from the carrier point onward.
  • Popular Use: Flexible for multi-modal transport and containerized goods

6. DAP (Delivered at Place)

  • Seller’s Responsibility: Delivers goods to the agreed destination, excluding import duties and taxes.
  • Buyer’s Responsibility: Handles customs clearance and import duties.
  • Popular Use: Often used in projects where precise delivery to the buyer’s site is critical.

Why Are These Popular?

  • EXW and FOB: Provide clear division of responsibilities, giving buyers more control.
  • CIF and DDP: Simplify transactions for buyers by shifting responsibilities to sellers.
  • FCA and DAP: Offer flexibility for modern logistics systems, including containerized transport.