Incoterms are the rules that shape the terms of international trade and which are recognised and used throughout the world for international trade. They are defined and updated every 10 years by the International Chamber of Commerce (ICC).
Incoterms define the obligations of the buyer and the seller regarding delivery, in other words who does what in terms of insurance. They clarify how transport costs are shared and when risk is transferred. This is because the Supply Chain comprises various stages (customs, loading/unloading, route, etc.). The Incoterms therefore specify who would be responsible in the event of a claim, as well as who pays for transport and up to which stage.
Any means of transport:
EXW : EX Works, the buyer bears all costs and risks inherent in the loading and transport of the goods until they reach their destination).
FCA : Free Carrier, 2 possible options depending on the delivery point.
CPT : Carriage Paid To, the seller bears the cost of transport to the destination but will not be responsible for the goods, which travel at the buyer's risk.
CIP : Carriage and Insurance Paid To, unlike CPT, the seller is responsible for taking out insurance to cover the risks associated with transporting the goods to their destination.
DAP : Delivered At Place, the seller is responsible for transporting the goods to the agreed delivery point in the destination country.
DPU : Delivered at Place Unloaded, the seller assumes all risks and costs associated with transporting and unloading goods until they reach the designated location.
DDP : Delivered Duty Paid, the maximum level of seller obligations, with the seller assuming all risks and costs, including customs clearance.
Sea transport only:
FAS : Free Alongside Ship, the buyer bears the costs and risks from the moment the goods are delivered.
FOB : Free On Board, cost and risk transfer takes place as soon as the goods are loaded onto the ship.
CFR : Cost and Freight, the risks are transferred to the buyer at the port of departure while the costs are borne by the seller until the goods arrive at the agreed port of destination, excluding unloading.
CIF : Cost, Insurance and Freight, equivalent to CIP, but differing from it with regard to the level of insurance cover required, which is more limited than the all-risk cover provided under CIP.