International Commercial Terms – Incoterms 2020
Incoterms 2020 are a series of standards created by the International Chamber of Commerce (ICC) and followed throughout the international framework.
The Incoterms® rules have become a fundamental part of international trade, shaping how businesses operate across borders. These globally recognized terms are integrated into contracts for the sale of goods, providing clear guidance for importers, exporters, legal professionals, transporters, insurers, and students of international commerce.
By defining the responsibilities of buyers and sellers, Incoterms® streamline transactions, ensuring a smooth flow of goods through the global supply chain. Below, we provide a brief overview of the 11 key rules from the Incoterms® 2020 edition.
E – Term
E-term refers to the seller transferring goods to the buyer at the seller’s own warehouse.
- EXW (Ex Works)
The seller makes the goods available at their premises. The buyer is responsible for all transportation and delivery costs.
F – Term
The seller does not pay the international shipping expenses, the seller is obliged to deliver the goods to the expeditor nominated by the buyer or by him/herself.
- FCA (Free Carrier)
The seller delivers the goods to the carrier nominated by the buyer at the seller’s premises. The buyer is responsible for all transportation and delivery costs.
- FAS (Free Alongside Ship)
The seller delivers the goods alongside the vessel at the agreed port of shipment. The buyer is responsible for all transportation and delivery costs.
- FOB (Free On Board)
The seller delivers the goods on board the vessel at the agreed port of shipment. The buyer is responsible for all transportation and delivery costs.
C – Term
The seller pays all international shipping expenses, he is obliged to deliver the goods to the buyer or to the expeditor nominated by him/her.
- CFR (Cost and Freight)
The seller delivers the goods on board the vessel at the agreed port of shipment and pays for the cost of transportation to the agreed port of destination. The buyer is responsible for all other costs, including customs clearance and delivery to their final destination.
- CIF (Cost, Insurance and Freight)
The seller delivers the goods on board the vessel at the agreed port of shipment and pays for the cost of transportation and insurance to the agreed port of destination. The buyer is responsible for all other costs, including customs clearance and delivery to their final destination.
- CPT (Carriage Paid To)
The seller pays for the cost of transportation to the agreed place of destination. The buyer is responsible for all other costs, including customs clearance and delivery to their final destination.
- CIP (Carriage and Insurance Paid To)
The seller pays for the cost of transportation and insurance to the agreed place of destination. The buyer is responsible for all other costs, including customs clearance and delivery to their final destination.
D- Term
The seller is obliged to undertake all expenses and risk, which are necessary for delivery of the goods till the nominated place of destination.
- DAP (Delivered at Place)
The seller delivers the goods at the agreed frontier, but the buyer is responsible for all transportation and delivery costs.
- DPU (Delivered At Place Unloaded)
The seller delivers the goods to the agreed port of destination, but the seller is responsible for all transportation and delivery costs.
- DDP (Delivered Duty Paid)
The seller delivers the goods at the agreed port of destination, but the buyer is responsible for all unloading costs.
