Incoterms

The incoterms define the role between seller and buyer at an international transaction. Who has what obligations, at what time? In the contract between the seller and the buyer, the following is determined: the duties of the buyer and the seller; who takes care of the insurances, license’s, permissions and all other formalities; who arranges the transport until which point and who is responsible for this; the point where the costs and risks pass on from the seller to the buyer.

These incoterms take care of the international rights and duties from the buyer and the seller. Six of the thirteen incoterms are about ocean freight, seven incoterms are regarding all transport modalities. All information is prepared and published by the International Chamber of Commerce (ICC). 

EXW – ExWorks

Seller's minimum obligation, seller only has to place the goods at the disposal of the buyer.

Buyer must carry out all tasks of export & import clearance.

Carriage & insurance is to be arranged by the buyer.

FCA - Free Carrier

Seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place.

Seller pays for carriage to the named place.

FAS - Free Alongside Ship

Seller delivers when the goods are placed alongside the vessel at the named port of shipment. Seller is required to clear the goods for export.

Buyer has to bear all costs & risks of loss or damage to the goods from that moment.

Ocean transport only.
 

FOB - Free On Board

Seller delivers when the goods pass the ship's rail at the named port of shipment.

Buyer to bear all costs & risks to the goods from that point.

Seller must clear the goods for export.

If the parties do not intend to deliver the goods across the ship's rail, the FCA term should be used.

Ocean transport only.

CFR - Cost and Freight

Seller delivers when the goods pass the ship's rail in the port of shipment.

Seller must pay the costs & freight necessary to bring the goods to the named port of destination, Buyer bears risk of loss or damage, as well as any additional costs due to events occurring after the time of delivery are transferred from seller to buyer.

Seller must clear goods for export.

Ocean transport only.
  

CIF - Cost, Insurance, Freight

Seller delivers when the goods pass the ship's rail in the port of shipment.

Seller must pay the cost & freight necessary to bring goods to named port of destination.

Buyer bears risk of loss or damage, as well as any additional costs due to events occurring after the time of delivery are transferred from seller to buyer.

Seller also has to procure marine insurance against buyer's risk of loss/damage during the carriage.

Seller must clear the goods for export.

Ocean transport only.
  

CIP - Carriage and Insurance Paid

Same as CPT with the exception:

Seller also has to procure insurance against the buyer's risk of loss or damage to the goods during the carriage.

Any mode of transportation.
  

CPT - Carriage Paid To…

Seller delivers the goods to the carrier nominated by him (the seller), but must in addition, pay the cost of carriage necessary to bring the goods to the named destination.

Buyer bears all costs occurring after the goods have been so delivered.

Seller must clear the goods for export.

Any mode of transportation.
  

DES - Delivered Ex Ship

Seller delivers when goods are placed at the disposal of the buyer on board the ship, not cleared for import at the named port of destination.

Seller bears all costs & risks in bringing the goods to the named port before discharging.

Ocean transport only.
  

DEQ - Delivered Ex Quay

Same as DES with the exception:

Seller is responsible to place the goods at the disposal of the buyer, not cleared for import, on the quay (wharf) at the named port of destination.

Seller bears all costs & risks as in DES plus discharging the goods on the quay.

Ocean transport only.
  

DDU - Delivered Duty Unpaid

Seller delivers the goods to the buyer, not cleared for import, and not unloaded from arriving means of transport at the named place of destination.

Seller bears all costs & risks involved in bringing the goods to the named place other than "duty" (includes responsibility for customs formalities, payments, duties & taxes) for import into the country of destination.

Buyer is responsible for payment of all customs & duties & taxes.
  

DDP: Delivered Duty Paid

Same as the DDU term with the exception:

Seller also will bear all costs & risks of carrying out customs formalities including the payment of duties, taxes & customs fees.

Maximum obligation to the seller.

Should not be used if the seller is unable to directly or indirectly to obtain the import license.

DAT: Delivered at Terminal

Seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.

DAP - Delivered At Place

Seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.