Incoterms

About a month ago, we published a blog post on Incoterms. We have now decided to expand on this post and explain Incoterms in more detail.

As we have already explained to you, Incoterms are internationally valid trade clauses that clarify the transfer of risk and costs when transporting goods between the contracting parties (e.g. buyer and seller). The purpose of Incoterms is to simplify trade, but their use is voluntary - they are not legal regulations.

E-Terms are departure clauses (Departure Terms).

There is actually only one E-term: EXW.

This stands for Ex Works. In this case, the exporter has delivered the goods at the moment he makes them available to the customer on his premises (warehouse, factory, etc.). From this moment on, the risks and costs are already borne by the importer.

EXW is the best condition for the exporter. For the importer, however, it is the worst.

F-terms are shipment terms in which the importer bears the costs for the main transportation.

With FCA (Free Carrier), the risk and costs are transferred to the importer when the exporter has handed over the goods to the first carrier.

FAS means "Free alongside ship". The exporter is responsible for clearing the goods for export and the risk and costs are transferred to the importer when the exporter has placed the goods in front of the ship at the port of shipment (on the quay; "alongside ship").

FOB stands for "Free on Board". Here, the risk and costs are transferred to the importer as soon as the goods have been loaded on board the ship at the port of shipment.

FAS and FOB only exist in maritime transport.

C-terms are also shipment terms in which the costs for the main transportation are borne by the exporter.

C-terms are two-point clauses. This means that costs and risks are transferred to other contracting parties at different points. In the case of one-point clauses (E, F and D terms), costs and risks are transferred at the same point. In the case of CFR (Cost and Freight), the exporter bears the costs until the goods reach the ship at the port of destination - even the unloading of the goods is at the importer's expense. However, the risk is already transferred to the importer when the goods are loaded onto the ship at the port of shipment.

CIF stands for Cost, Insurance and Freight and is identical to CFR except for one thing: the exporter bears the cost of transport insurance. CIF and CFR also exist exclusively in maritime transport.

CPT stands for Carriage paid to. With CPT, the exporter bears the costs up to the destination. The risk is transferred to the importer when the goods are handed over to the first carrier.

CIP stands for "Carriage and Insurance paid to". CIP is identical to CPT, but here too the exporter bears the costs of transportation insurance (as with CIF).

D-terms are arrival terms. With D-terms, the exporter assumes both costs and risks up to the destination.

DAT stands for Delivered at Terminal. Here, the exporter bears the costs and risks up to the terminal at the destination. The importer is responsible for clearing the goods for import. A terminal can be, for example, a warehouse, a container terminal at the port or a terminal at the airport. Onward transportation to the place of delivery is required.

With DAP (Delivered at place), the exporter assumes the costs and risk until the goods reach their destination. Here too, the importer is responsible for clearing the goods for import.

DDP stands for Delivered, duty paid. Here the exporter bears the costs and risks up to the place of delivery. DDP is the best condition for the importer and the worst for the exporter.

If you would like to find out more about Incoterms, take a look at the latest blog post or our Instagram page.

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