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Incoterms

The purpose of Incoterms is to provide international rules for explaining frequently used terms in international trade to avoid interpretation differences.

EXW: Ex Works

The seller meets his obligation to supply when he makes the goods available to the buyer in his business premises. The seller is not responsible for loading and custom clearance of the goods. The buyer is responsible for payment of all costs and transport risks.

FCA Free Carrier

The seller meets his obligation to supply when he has arranged for clearance of the goods and transferred them to the carrier indicated by the buyer.

FOB Free On Board

The seller meets his obligation to supply when the goods have passed the ship’s rail at the indicated port of shipment. This means that from that point on the buyer is responsible for payment of all costs and bears the risks of loss or damage to the goods. Under FOB terms the seller is required to arrange for clearance of the goods.

CFR Cost and Freight

The seller has to pay the costs and freight to have the goods transported to the indicated port of destination, but risks of loss and damage as well as additional costs once the goods are loaded are transferred from the buyer to the seller as soon as they pass the ship’s rail. Under CFR terms the seller is required to arrange for clearance of the goods.

CIF Cost, Insurance and Freight

The seller has the same obligations as under CFR, but is additionally required to take out goods in transit insurance. Under CFR terms the seller is required to arrange for clearance of the goods. This term can only be used in relation to sea and inland waterway transport.

CPT Carriage Paid to….

The seller pays the carriage charges for transport to the indicated destination. The risk of loss or damage is transferred from the seller to the buyer when the goods have been handed over to the carrier. Under CPT terms the seller has to arrange for clearance of the goods. This term applies to all means of transportation, including multimodal transport.

CIP Carriage and Insurance Paid to… 

The seller has the same obligations as under CPT, but with the addition that the seller has to take out goods in transit insurance against the risk – for the seller – of loss or damage to the goods during transport. Under CIP terms the seller is required to arrange for clearance of the goods. This term applies to all means of transportation, including multimodal transport.

DAF Delivered At Frontier

The seller supplies the goods when clearance has taken place and they have been made available at the location agreed. This usually is a border. The term is mainly meant for transport by rail and road, but can also apply to all other means of transportation.

DDU Delivered Duty Unpaid 

The seller supplies when the goods have been made available at the indicated place in the country of import. The seller has to pay the costs for risks involved in transportation to this location, except for duties, taxes and fees for completing custom formalities.

DDP Delivered Duty Paid 

The seller supplies when the goods have been made available at the indicated location in the country of import. The seller is responsible for the risks and the costs including duties, taxes and other levies. This term can be used regardless of means of transportation.
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