Incoterms are the standard International trade agreements for the transport of commercial goods. These terms determine the division of liability and responsibility between the buyer and the seller.
The Incoterms are issued and published by the International Chamber of Commerce. The first edition of the Incoterms dates back to 1932. In order to keep up with the increasing amount of electronic data processing, the terms were revised in 1990.
The version currently being used is the Incoterms 2010, which came in to effect on 2011.
You can agree to the following matters by means of an incoterm:
- Who is responsible for transport insurances, licenses, authorisations and other formalities?
- Who provides the transport and up to where?
- When will the risks and costs of the delivery transfer from the seller to the buyer?
There are 11 incoterms: 4 are intended specifically for transport by water. The other 7 apply to all kinds of transport (multimodal transport).
- FAS – Free Alongside Ship
- FOB – Free on Board
- CFR – Cost and Freight
- CIF – Cost, Insurance and Freight
Incoterms multimodal transport:
- EXW – Ex Works
- FCA – Free Carrier
- CPT – Carriage Paid To
- CIP – Carriage and Insurance Paid To
- DAT – Delivered at Terminal
- DAP – Delivered at Place
- DDP – Delivered Duty Paid