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Incoterms® 2020 Essentials for Exporters: Mastering Terms and Minimizing Risk

What are Incoterms?
 Incoterms ("International Commercial Terms") are a set of standardized trade terms published by the International Chamber of Commerce (ICC) to define the responsibilities of buyers and sellers in international transactions.
Why is Incoterms Important?

  • Clarify who arranges and pays for transport, insurance, customs clearance, etc.

  • Reduce the risk of legal disputes.

  • Ensure a shared understanding between trading partners.

Key Groups of Incoterms:

  1. Group E – Departure

    • EXW (Ex Works): Seller makes goods available at their premises.

  2. Group F – Main Carriage Unpaid

    • FCA (Free Carrier): Seller delivers goods to carrier chosen by buyer.

    • FAS (Free Alongside Ship): Goods placed alongside vessel (used for sea transport).

    • FOB (Free On Board): Goods loaded on board vessel (sea transport).

  3. Group C – Main Carriage Paid

    • CFR (Cost and Freight): Seller pays for transport to destination port (no insurance).

    • CIF (Cost, Insurance and Freight): Seller pays for transport and insurance.

    • CPT (Carriage Paid To): Seller pays carriage to destination (non-sea).

    • CIP (Carriage and Insurance Paid To): Seller pays carriage and insurance.

  4. Group D – Arrival

    • DAP (Delivered at Place): Seller delivers to named place; buyer handles import duties.

    • DPU (Delivered at Place Unloaded): Seller delivers and unloads goods at destination.

    • DDP (Delivered Duty Paid): Seller delivers to destination and pays all duties and taxes.

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