Incoterms: Your Guide to International Commercial Terms
Short for International Commercial Terms, Incoterms are a set of universal guidelines, which act as a common language used between sellers and buyers globally.
These guidelines are super important in the supply chain industry; as they allow buyers and sellers to interpret and translate different global trade terms, clearly outlining the tasks, costs and risks associated between parties.
Incoterms were developed by the International Chamber of Commerce (ICC) in 1936, and are updated intermittently as trade practices change. Because of this, it is important for parties to specify which version of Incoterms they are using within a contract. The most recent set of Incoterms were released in 2020.
The 2020 version of Incoterms includes 11 terms, each outlining the roles and responsibilities of each party. 7 of these terms are applicable across any mode of transport, as outlined in the chart below which we use on a daily basis:
The 7 Incoterms 2020 rules for any mode of transport:
|EXW||Ex Works (insert place of delivery)|
|FCA||Free Carrier (insert named place of delivery)|
|CPT||Carriage Paid to (insert place of deliver)|
|CIP||Carriage and Insurance Paid To (insert place of destination)|
|DAP||Delivered at Place (insert named place of destination)|
|DPU||Delivered at Place (insert of place of destination)|
|DDP||Delivered Duty Paid (insert place of destination)|
The 4 Incoterms 2020 rules for Sea and Inland Waterway Transport:
|FAS||Free Alongside Ship (insert name of port of loading)|
|FOB||Free on Board (insert named port of loading)|
|CFR||Cost and Freight (insert named port of destination)|
|CIF||Cost Insurance and Freight (insert named port of destination)|