Incoterms Rules

The buyer arranges and pays for all transportation, customs-related fees and insurance at origin and destination. The seller’s responsibility ends at the factory door. This is ideal for buyers who want to minimize product purchase costs and maintain full control over shipping.

The seller delivers goods to the carrier, or another person nominated by the buyer at the seller’s premises, or another named place at origin. The buyer assumes risk at that point and handles freight and all additional charges. FCA works well for buyers who believe they can arrange ocean carriage at a better price than the seller can quote.

The seller selects the carrier and pays for transport to the agreed destination at origin. Risk transfers to the buyer once the goods are handed over to the first carrier. CPT works for buyers that don’t want full control over transportation and where the seller may have more knowledge and buying power with transportation in the origin country.

The seller covers transport and insurance to the destination, but risk transfers to the buyer once the goods are handed over to the first carrier. This term is essentially the same as CPT, with the exception of the seller insuring the cargo. The buyer should check if the seller’s insurance coverage is sufficient. CIP works best for buyers that don’t have extensive international shipping experience and want the seller to arrange transportation and insurance for the main carriage.

The seller arranges delivery to the agreed location at the destination, but the buyer manages the import clearance process, pays charges such as import duties, VAT, and brokerage fees, and handles onward transportation. DAP works best when the buyer has the expertise to handle logistics and customs clearance details at destination but wants the seller to arrange international transportation.

The seller delivers and unloads the goods at an agreed place in the destination country. However, the buyer is responsible for customs clearance and any import duties. This term was formerly referred to as DAT (Delivered at Terminal). DPU is best for buyers with expertise in customs clearance and local transportation at destination, but prefer not to unload the cargo. One example where DPU is advantageous is when a single container holds goods for several buyers, allowing the seller to unload and distribute the goods to each different consignee.

The seller handles all transportation management and cost, from door to door. DDP is ideal for buyers who lack logistics expertise and resources and want minimal involvement in the shipping process.

The seller delivers goods next to the vessel nominated by the buyer at origin. Once this happens, the buyer assumes all risk and manages and pays for the rest of the shipping process. FAS is best for buyers that want to maintain responsibility for loading the vessel and managing transportation from the origin port onwards.

The seller is responsible for transporting cargo to the port and loading it onto the vessel, as well as the costs of export duties, taxes and customs clearance at origin. The buyer chooses the carrier and assumes all costs and risks from the moment the goods are on board.

The seller is responsible for transportation and all costs from the factory to the destination port. With CFR, risk transfers to the buyer once the goods are loaded onto the ship, even though the seller is responsible for international shipping costs. Insurance is not included, so the buyer should arrange coverage. CFR is best for buyers who don’t want to be involved freight shipment prior to when the goods arrive at the destination port.

The seller pays for transport and insurance to the destination port, but risk transfers to the buyer once the goods are loaded onto the ship. Buyers should confirm the insurance terms meet their needs. CIF is commonly used for large deliveries, including oversized goods, that are shipped by sea.