Incoterms 2020: A Quick Guide for Global Trade
When engaging in international trade, Incoterms (International Commercial Terms) define the responsibilities of buyers and sellers regarding transportation, costs, risks, and customs formalities. Understanding these terms is crucial for smooth and efficient global transactions. Below is an overview of the Incoterms 2020, including their key responsibilities.
| Incoterm | Description |
|---|---|
| EXW (Ex Works) | The seller makes the goods available at their premises. The buyer bears all costs and risks from there. |
| FCA (Free Carrier) | The seller delivers the goods to the agreed carrier. The buyer assumes risks and further costs. |
| FAS (Free Alongside Ship) | The seller places the goods alongside the vessel at the port. The buyer takes responsibility from that point. |
| FOB (Free On Board) | The seller loads the goods onto the ship. The buyer assumes costs and risks after loading. |
| CFR (Cost and Freight) | The seller covers freight costs to the destination port, but the buyer bears risks after shipment. |
| CIF (Cost, Insurance and Freight) | Like CFR, but the seller also provides minimum transport insurance. |
| CPT (Carriage Paid To) | The seller pays for transport to the destination, but risks transfer to the buyer once handed to the first carrier. |
| CIP (Carriage and Insurance Paid To) | Like CPT, but the seller provides additional transport insurance. |
| DAP (Delivered At Place) | The seller covers all costs and risks until delivery at the specified location, but unloading is the buyer’s responsibility. |
| DPU (Delivered at Place Unloaded) | The seller is responsible for costs, risks, and unloading at the destination. |
| DDP (Delivered Duty Paid) | The seller covers all costs, duties, and taxes until final delivery. |
Complete List of Incoterms 2020
- EXW – Ex Works
- FCA – Free Carrier
- FAS – Free Alongside Ship
- FOB – Free On Board
- CFR – Cost and Freight
- CIF – Cost, Insurance and Freight
- CPT – Carriage Paid To
- CIP – Carriage and Insurance Paid To
- DAP – Delivered At Place
- DPU – Delivered at Place Unloaded
- DDP – Delivered Duty Paid
Understanding Incoterms ensures better contract negotiations and minimizes risks in global trade. Make sure to choose the right term for your business needs! 🚢📦