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ICS Global Logisitcs - Incoterm

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The most common Incoterms (International Commercial Terms) are used to define the responsibilities of buyers and sellers in international trade.

1. EXW (Ex Works):

  • Seller’s Responsibility: The seller makes the goods available for pick-up at their premises or another agreed location.
  • Buyer’s Responsibility: The buyer takes on the responsibility for all transportation costs, insurance, and risks from the seller’s premises to the destination.

2. FOB (Free On Board):

  • Seller’s Responsibility: The seller is responsible for the goods until they are loaded onto the vessel at the port of shipment.
  • Buyer’s Responsibility: The buyer assumes responsibility for the goods once they are loaded onto the vessel, including transportation costs and risks.

3. CIF (Cost, Insurance, and Freight):

  • Seller’s Responsibility: The seller pays for the cost of goods, insurance, and freight to the port of destination.
  • Buyer’s Responsibility: The buyer assumes responsibility for the goods once they arrive at the destination port, including unloading and customs clearance.

4. CFR (Cost and Freight):

  • Seller’s Responsibility: The seller is responsible for the cost and freight of shipping the goods to the destination port.
  • Buyer’s Responsibility: The buyer is responsible for insurance and any other costs incurred after the goods arrive at the destination port

5. DAP (Delivered At Place):

  • Seller’s Responsibility: The seller delivers the goods to a specified destination, ready for unloading.
  • Buyer’s Responsibility: The buyer is responsible for customs clearance and any import duties at the destination.

6. DDP (Delivered Duty Paid):

  • Seller’s Responsibility: The seller is responsible for all costs, risks, and responsibilities associated with delivering the goods to the buyer’s destination, including duties and taxes.
  • Buyer’s Responsibility: The buyer’s responsibility is minimal; they only need to receive the goods at the destination.

7. FCA (Free Carrier):

  • Seller’s Responsibility: The seller delivers the goods to a carrier nominated by the buyer at an agreed location.
  • Buyer’s Responsibility: The buyer takes responsibility for the goods once they are delivered to the carrier, including all subsequent costs and risks.

8. FAS (Free Alongside Ship):

  • Seller’s Responsibility: The seller delivers the goods alongside the ship at the port of shipment.
  • Buyer’s Responsibility: The buyer assumes responsibility once the goods are placed alongside the ship, including loading and transport.

Each Incoterm sets clear expectations for both parties and minimizes confusion regarding who is responsible for various aspects of the international shipping process. When selecting the right Incoterm for your transaction, it’s important to understand the balance of cost, risk, and responsibility for both the buyer and seller.