Incoterms
Incoterms or International Commercial Terms from 2020

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      What are Incoterms?

      Incoterms stands for International Commercial Terms, which is the German term for international trade terms. These clauses comprise a set of predefined international rules published by the International Chamber of Commerce that establish contract clauses for international trade agreements.

      Incoterms play a very important role for international sales contracts. In this article you will read what is determined by Incoterms. The Incoterms have already been adapted several times and the latest version of the Incoterms is from 2020.

      Content

      What do Incoterms specify?

      • Who bears the costs and responsibility for the individual components of international transport?
      • Where is the transfer of risk? Who is responsible for the goods and when?
      • Where does the seller deliver?
      • Who covers the insurance? Who pays for the insurance?
      • Who takes care of customs clearance / export declaration?
      • Who has to create or provide which document?

      How can Incoterms be classified?

      • Clauses for each type of transport (EXW, FCA, CPT, CIP, DAP, DPU, DDP)
      • Clauses for maritime and inland waterway transport (FAS, FOB, CFR, CIF)
      • Group E clauses: pick-up clauses
      • Group F clauses: Shipment clauses (seller assumes costs and risk for main transport).
      • Group C clauses: dispatch clauses (buyer assumes costs and risk for main transport)
      • Group D clauses: Arrival clauses

      An overview of the 11 clauses of the Incoterms

      Below you will find the list of Incoterms including graphical representations. For a more compact presentation of the Incoterms, we have created a tabular overview for you. To facilitate your understanding, we have divided the four most important Incoterms for you. Just ask yourself the question: are you a buyer or a seller? For buyers, the Incoterms FCA and EXW are of particular interest. Sellers should take a closer look at Incoterms DAP and DDP.

      An overview of the 11 clauses of the Incoterms

      FCA – Free Carrier / Freight Carrier: Seller shall deliver the goods to the carrier or other person designated by Buyer at Seller’s location or other designated location.

      EXW – Ex Works / Ex factory: The transport is completely organized by the buyer. The seller does not need to load the goods, nor is he responsible for customs clearance of the goods.

      H3: Incoterms for sellers: DAP, DDP

      DAP – Delivered At Place: The seller bears the costs and risks of transporting the goods to an agreed address. As soon as the goods arrive there and are released for unloading, the possible risks are transferred to the buyer.

      DDP – Delivered Duty Paid / geliefert Zoll bezahlt: The seller bears the full costs as well as the risks and must make the goods cleared for import available to the buyer at the agreed destination unloaded.

      Overview of Incoterms 2020 with obligations of the seller and buyer

      Below you will find the list of Incoterms including graphical representations. For a more compact presentation of the Incoterms, we have created a tabular overview for you. To facilitate your understanding, we have divided the four most important Incoterms for you. Just ask yourself the question: are you a buyer or a seller? For buyers, the Incoterms FCA and EXW are of particular interest. Sellers should take a closer look at Incoterms DAP and DDP.

      Cargoboard packaging Loading fees Transport to export location
      EXW Seller Buyer Buyer
      FCA Seller Seller Seller
      CPT Seller Seller Seller
      CIP Seller Seller Seller
      DAP Seller Seller Seller
      DPU Seller Seller Seller
      DDP Seller Seller Seller
      FAS Seller Seller Seller
      FOB Seller Seller Seller
      CFR Seller Seller Seller
      CIF Seller Seller Seller
      Cargoboard Export duties, taxes and customs clearance
      		 Terminal costs Place of origin
      		 Loading for transport
      EXW Buyer Buyer Buyer
      FCA Seller Buyer Buyer
      CPT Seller Seller Seller
      CIP Seller Seller Seller
      DAP Seller Seller Seller
      DPU Seller Seller Seller
      DDP Seller Seller Seller
      FAS Seller Seller Seller
      FOB Seller Seller Seller
      CFR Seller Seller Seller
      CIF Seller Seller Seller
      Cargoboard Export duties, taxes and customs clearance
      		 Terminal costs Place of origin
      		 Loading for transport
      EXW Buyer Buyer Buyer
      FCA Seller Buyer Buyer
      CPT Seller Seller Seller
      CIP Seller Seller Seller
      DAP Seller Seller Seller
      DPU Seller Seller Seller
      DDP Seller Seller Seller
      FAS Seller Seller Seller
      FOB Seller Seller Seller
      CFR Seller Seller Seller
      CIF Seller Seller Seller
      Cargoboard Transportation to destination Import duties, taxes and customs clearance
      EXW Buyer Buyer
      FCA Buyer Buyer
      CPT Buyer Buyer
      CIP Buyer Buyer
      DAP Buyer Buyer
      DPU Buyer Buyer
      DDP Seller Seller
      FAS Buyer Buyer
      FOB Buyer Buyer
      CFR Buyer Buyer
      CIF Buyer Buyer