Incoterms
Would you like to import or export goods? Then it is important to make important arrangements with the business partner about the transport of the cargo. It is therefore important to agree on an Incoterm in advance. There are a number of different Incoterms, each with its own obligations for the seller and the buyer.
Incoterms meaning
Each Incoterm tells the exact division between the obligations of the seller and the obligations of the buyer of the goods. Incoterms indicate who bears responsibility for transport, transport costs, export of goods and import of goods. The point at which risk is transferred is also described by Incoterm. Incoterms define who bears responsibility for damage or loss of the goods during the transportation process and when.
Incoterms overview
The Incoterms are revised every 10 years by the International Chamber of Commerce. The latest version dates from 2020. From this, the following 11 Incoterms have emerged, each of which is suitable in a different way for making good agreements between seller and buyer during the transport of goods.
Incoterms in view. Download the diagram below
FCA - Free Carrier
- Under FCA, the seller is responsible for delivering the goods to the buyer's carrier
- The seller takes care of all costs and documents for carrying out the goods
- The transfer of risk takes place at the time the buyer's carrier takes delivery of the goods.
CPT - Carriage Paid To
- With CPT, the seller is responsible for arranging the transport up to the buyer's carrier
- The seller takes care of all costs and documents for carrying out the goods
- The transfer of risk takes place when the goods arrive at the first carrier.
CIF - Cost Insurance and Freight
- Under CIF, the seller is responsible for delivering the goods aboard the agreed vessel
- The seller pays for this transport and is obliged to arrange insurance with at least minimum coverage
- The transfer of risk takes place once the goods have been delivered to the vessel.
FOB - Free On Board
- With FOB, the seller is responsible for delivering the goods on board the agreed vessel
- The seller takes care of all costs and documents for the export of the goods
- The transfer of risk takes place once the goods are delivered on the vessel. Delivered Duty Paid
- With DDP, the seller is responsible for the transport and its costs
- The seller also bears the risk during the transport of the goods
- The transfer of risk takes place once the goods are ready to be unloaded at the destination.
DAP - Delivered At Place
- With DAP, the seller is responsible for the transport and its costs
- The seller arranges everything around the export of the goods and the buyer arranges everything around the import of the goods
- The transfer of risk takes place as soon as the goods are ready to be unloaded at the destination.
CFR - Cost and Freight
- Under CFR, the seller is responsible for delivering the goods on board the agreed vessel
- Once the goods are on board, the buyer bears all responsibilities for the goods and the rest of the transport
- The transfer of risk takes place once the goods are on the vessel.
CIP - Carriage And Insurance Paid
- Under CIP, the seller is responsible for arranging the transport to the agreed destination
- The seller is obliged to take out insurance
- The transfer of risk takes place as soon as the goods arrive at the buyer's carrier.
FAS - Free Alongside Ship
- With FAS, all risks and costs of transport are for the seller until the goods have been delivered alongside the agreed ship on the quay
- From that point onwards, the buyer is responsible for the goods and their onward transport
- The transfer of risk takes place once the goods have been delivered alongside the ship by the seller
DPU - Delivered At Place Unloaded
- The seller is obliged to take out insurance. Delivered At Place Unloaded
- Under DPU, the seller is responsible for the entire transport process and costs
- The seller is also responsible for unloading the goods at the agreed destination
- The transfer of risk takes place once the seller has unloaded the goods at the destination.
Incoterms transport
Some Incoterms are transport-bound; they apply only to the transport of goods by one type of means of transport. We distinguish between two categories. The first category is transport by sea or inland waterways. The second category are all other Incoterms that can be used with any form of transport.
Incoterms sea freight
These Incoterms can only be used with goods that have to be transported by water. This can be either sea or inland waterways. Per Incoterm, it differs what kind of goods can be transported with it (general cargo or containers).
- CIF - Cost, Insurance and Freight
- CFR - Cost And Freight
- FOB - Free On Board
- FAS - Free Alongside Ship
Other Incoterms
All other Incoterms can be used for any kind of modality. It does not matter by what kind of means of transport the goods are taken from place A to B. This could be by road, air or water.
- CIP - Carriage and Insurance Paid To
- CPT - Carriage Paid To
- DAP - Delivered At Place
- DPU - Delivered at Place Unloaded
- DDP - Delivered Duty Paid
- EXW - Ex Works
- FCA - Free Carrier
Incoterms charges
There are many different types of charges involved in (international) trade. Consider the cost of transport, the cost of loading and unloading goods, taxes for importing and exporting goods and any insurance. It varies from Incoterm to Incoterm which party is responsible for which costs.