What are Incoterms®?
Incoterms ® or International Commercial Terms are the common language of international trade. Established by the International Chamber of Commerce (ICC), they are standard terms which are commonly incorporated into contracts for the trade of goods around the world.
They help buyers and sellers avoid costly misunderstandings by clarifying who bears the obligations, costs and risks involved in the delivery of goods from sellers to buyers.
Incoterms® provide clarity and predictability to businesses across the globe.
The Incoterms® were last updated in 2019 and hence Incoterms® 2020 are the most current version of the terms. However, some buyers and sellers still prefer to use Incoterms® 2010.
In total, there are 11 sets of Incoterms®, of which, 7 are applicable to all modes of transport, and the other 4 cater to sea and inland waterway transport only.
Incoterms® for all modes of transport
- Ex Works (EXW)
- Free Carrier (FCA)
- Carriage Paid To (CPT)
- Carriage and Insurance Paid To (CIP)
- Delivered at Place (DAP)
- Delivered at Place Unloaded (DPU)
- Deliver Duty Paid (DDP)
Incoterms® for sea and inland waterway transport
- Free Alongside Ship (FAS)
- Free on Board (FOB)
- Cost and Freight (CFR)
- Cost, Insurance and Freight (CIF)