All Incoterms explained

Would you like to import or export goods? Then it is important to make important arrangements with the business partner about the transportation of the cargo. That is why it is 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 transportation, transportation 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
Incoterms are revised every 10 years by the International Chamber of Commerce. The latest version dates from 2020. This has resulted in the following eleven Incoterms, each of which is suitable in a different way for making good agreements between seller and buyer during the transport of goods.

Download the complete list of all current Incoterms here

FCA - Free Carrier
- With FCA , the seller is responsible for delivering the goods to the buyer's carrier.
- The seller takes care of all costs and documents for exporting the goods
- Risk transfer occurs when the buyer's carrier takes delivery of the goods.

CPT - Carrier Paid To
- With CPT, the seller is responsible for arranging transportation up to the buyer's carrier
- The seller takes care of all costs and documents for exporting 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 transportation and is required to arrange insurance with at least minimum coverage
- The transfer of risk takes place as soon as the goods are delivered on 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 as soon as the goods are delivered on the vessel.

EXW - Ex Works
- With EXW, the buyer is responsible for almost the entire transport process and costs
- The seller ensures that the goods are available for the buyer
- The transfer of risk takes place at the seller's premises where the buyer comes to pick up the goods

DDP - Delivered Duty Paid
- With DDP, the seller is responsible for the transport process and costs
- The seller also bears the risk during 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 transportation and its cost
- The seller handles everything around the export of the goods and the buyer handles everything around the import of the goods
- The transfer of risk takes place once the goods are ready to be unloaded at the destination.

CFR - Cost And Freight
- Under CFR, the seller is responsible for delivering the goods aboard the agreed vessel
- Once the goods are on board, the buyer bears all responsibilities for the goods and the rest of the transportation
- 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 transportation to the agreed destination
- The seller is required to take out insurance
- The transfer of risk occurs once the goods have arrived 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 vessel at the quay
- From that moment on, 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 vessel by the seller

DPU - Delivered At Place Unloaded
- With DPU the seller is responsible for the entire transport process and the costs
- The seller is also responsible for unloading the goods at the agreed destination
- The transfer of risk takes place as soon as the seller has unloaded the goods at the destination

Incoterms transport
Some Incoterms are transport-bound; they only apply to the transport of goods via one type of transport means. 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 must be transported by water. This can be either sea or inland waterways. Each Incoterm determines the type of goods that can be transported (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 what kind of means of transport is used to get the goods from place A to B. This can be by road, air or water.

Incoterms costs
(International) trade involves many different types of costs. Consider the cost of transportation, the cost of loading and unloading the goods, taxes for importing and exporting goods and any insurance. It varies by Incoterm which party is responsible for which costs.

Sea or air freight shipments with customs obligation?
Global shipments and shipments within Europe to/from non-EU countries are subject to customs obligations. What measures do you need to take and what documents are required? With the knowledge and experience of our specialists in the Rotra customs department, we are able to provide solutions for all your customs obligations that fit your logistics process while you focus on your own core business. For more info contact us directly.