Inco Terms
International Set of Trade Terms
When negotiating an international sales contract, both parties need to pay as much attention to the terms of sale as to the sales price. To make it as clear as possible, an international set of trade terms (INCOTERMS) has been adopted by most countries that defines exactly the responsibilities and risks of both the buyer and seller including while the merchandise is in transit.
The following chart summarizes the responsibilities of both the buyer and seller for each of the current 13 INCOTERMS. In addition, a definition for each term is included at the bottom of the page.
For a more complete description of each of the INCOTERMS, The IBT Guide to INCOTERMS 2000 book published by International Business Training fully and clearly defines each of the new INCOTERMS that became effective January 1, 2000, and includes a number of case studies that demonstrate the use of the different terms in real-life situations.
| SERVICES | EXW Ex Works |
FCA Free Carrier |
FAS Free Alongside Ship |
FOB Free Onboard Vessel |
CFR Cost & Freight |
CIF Cost Insurance & Freight |
CPT Carriage Paid To |
CIP Carriage Insurance Paid To |
DAF Delivered At Frontier |
DES Delivered Ex Ship |
DEQ Delivered Ex Quay Duty Unpaid |
DDU Delivered Duty Unpaid |
DDP Delivered Duty Paid |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Warehouse Storage | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Warehouse Labor | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Export Packing | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Loading Charges | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Inland Freight | Buyer | Buyer/Seller* | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Terminal Charges | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Forwarder's Fees | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Loading On Vessel | Buyer | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Ocean/Air Freight | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Charges On Arrival At Destination | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Buyer | Buyer | Seller | Seller | Seller |
| Duty, Taxes & Customs Clearance | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller |
| Delivery To Destination | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller | Seller |
* There are actually two FCA terms: FCA Seller's Premises where the seller is responsible only for loading the goods and not responsible for inland freight; and FCA Named Place (International Carrier) where the seller is responsible for inland freight.
The 13 INCOTERMS
Origin Terms
EXW – Ex-Works
Named place where shipment is available to the buyer, not loaded. The seller will not contract for any transportation.
International Carriage NOT Paid by Seller
FCA – Free Carrier
Unloaded at the seller's dock OR a named place where shipment is available to the international carrier or agent, not loaded. This term can be used for any mode of transport.
FAS – Free Alongside Ship
Named ocean port of shipment. Ocean shipments that are NOT containerized.
FOB – Free On Board vessel
Named ocean port of shipment. This term is used for ocean shipments only where it is important that the goods pass the ship's rail.
International Carriage Paid by the Seller
CFR – Cost and Freight
Named ocean port of destination. This term is used for ocean shipments that are not containerized.
CIF – Cost, Insurance and Freight
Named ocean port of destination. This term is used for ocean shipments that are not containerized.
CPT – Carriage Paid To
Named place or port of destination. This term is used for air or ocean containerized and roll-on roll-off shipments.
CIP – Carriage and Insurance Paid To
Named place or port of destination. This term is used for air or ocean containerized and roll-on roll-off shipments.
Arrival At Stated Destination
DAF – Delivered At Frontier
Named place of destination, by land, not unloaded. This term is used for any mode of transportation but must be delivered by land.
DES – Delivered Ex-Ship
Named port of destination, not unloaded. This term is used for ocean shipments only.
DEQ – Delivered Ex-Quay
Named port of destination, unloaded, not cleared. This term is used for ocean shipments only.
DDU – Delivered Duty Unpaid
Named place of destination, not unloaded, not cleared. This term is used for any mode of transportation.
DDP – Delivered Duty Paid
Named place of destination, not unloaded, cleared. This term is used for any mode of transportation.