Inco terms make international trade easier and help traders in different countries to understand one another. These standard trade definitions are most commonly used in international contracts and are protected by ICC copyright.
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.
|Services||Ex Works||Free Carrier||Free Alongside Ship||Free Onboard Vessel||Cost & Freight||Cost Insurance & Freight||Carriage Paid To||Carriage Insurance Paid To||Delivered at Terminal||Delivered at Place||Delivered Duty Paid|
|Inland Freight||Buyer||Buyer / Seller*||Seller||Seller||Seller||Seller||Seller||Seller||Seller||Seller||Seller|
|Loading On Vessel||Buyer||Buyer||Buyer||Seller||Seller||Seller||Seller||Seller||Seller||Seller||Seller|
|Charges On Arrival At Destination||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Seller||Seller||Seller||Seller||Seller|
|Duty, Taxes & Customs Clearance||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Seller|
|Delivery To Destination||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Seller|
EXW - Ex-Works, named place where shipment is available to the buyer, not loaded.
The seller will not contract for any transportation.
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.
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.
DAT – 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 – 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.