In international trade, shipping can be confusing and daunting from the point of view of buyers and sellers. It is important to know all the ways of international incoterms, to understand who is responsible for the goods when, who should pay for transportation and insurance. 
Different requirements and conditions set by governments around the world can be a problem for international trade. That is why the International Chamber of Commerce (ICC) has developed the rules known as Incoterms, thanks to which international trade has become easier and less risky for everyone involved in trading.
Incoterms are predefined business terms from ICC. These are three-letter abbreviations of commercial terms related to joint agreement sales practices.
Incoterms was first published by the ICC in 1936 to eliminate disputes over who pays for freight, insurance, and other transportation costs during the transportation of goods, and its current version is Incoterms 2020. The previous version was Incoterms 2010.
The ICC has introduced these shipping terms to identify the costs and risks associated with the transportation and delivery of goods in sales agreements around the world. The terms eliminate ambiguities around interpretations and have been adopted by governments, legal authorities, and contractors.
The parties should use Incoterms to help inform them of several decisions that may be taken during the delivery of the goods from the buyer to the seller. This circumstance is especially important for identifying the transfer of risk.
Incoterms are a set of definitions of the international trade tradition. There are eleven definitions of international trade traditions, and each of them has an abbreviated name in three letters. When the seller and the buyer decide to put such an abbreviation in their trade agreement, it means that they will adhere to these trading traditions and decide on mutual obligations.
The delivery time is not part of the carriage contract. It can provide information to third parties about the seller's and buyer's obligation to deliver the goods. Since the delivery time defines the obligations on the delivery of the goods, the term must always correspond to the agreed trade customs.
Incoterms delivery methods define the mutual obligations of the seller and the buyer. The terms do not define the issues that are in the best interest of the contracting party.
The seller and the buyer are parties to the trade agreement. Carriers, forwarding agents and all subcontractors act on behalf of either the seller or the buyer.
The major features of these eleven terms are set out below. The first seven terms cover all modes of transport, while the last four terms relate only to the modes of delivery of sea or inland water transport.
In the EXW incoterm at work, the seller delivers the goods at the designated place at the agreed time of delivery, leaving it at the buyer's disposal. The seller pays the costs and assumes the risk of loss or damage to the goods until the goods are delivered.
In the EXW incoterm, the buyer receives the delivery when the seller leaves the goods at his disposal at the designated place at the agreed time. The buyer pays the costs and assumes the risk of loss or damage to the goods after delivery. The buyer fulfills the formalities of export and import.
According to EXW, the seller has a minimum of obligations. The seller delivers the goods to the buyer's disposal at the agreed time and place. The agreed place of this type can be, for example, the courtyard or the seller's warehouse. The buyer, usually the carrier subcontracted by the buyer, loads, and receives the goods.
In the FCA incoterm, the seller delivers the goods to the buyer at the agreed time of delivery, at the agreed place, when he delivers them to the carrier designated by the buyer. The seller pays the costs and assumes the risks of damage or loss of the goods until they are delivered. The seller deals with export formalities. When the seller delivers the goods to the carrier specified by the buyer, the buyer receives the goods.
In the FCA international incoterm, the buyer pays the costs and assumes the risk of loss or damage to the goods after delivery. The buyer assumes the formalities for the importation of the goods and their transit from any country.
According to the FCA, the seller delivers the goods to the buyer close to the seller. The seller delivers the goods, and the buyer receives the delivery when the seller delivers the goods under the supervision of a carrier designated by the buyer. At the same time, the costs are divided, and the risk passes from the seller to the buyer. The seller can deliver the goods to the buyer, usually to the carrier specified by the buyer, either on the seller's property or at another place designated by the buyer, for example, at the carrier's terminal.
In the CPT incoterm, the seller bears the costs until he delivers the goods in question for trading, takes the risks in case of loss or damage to the goods. The seller enters a contract of carriage and pays the freight to the agreed destination. The seller deals with export formalities.
In the CPT incoterm, the buyer receives the goods when the seller delivers it to the carrier at the place of loading at the agreed delivery time. The buyer receives the goods from the carrier at the specified destination. The buyer pays the costs other than freight, and the buyer is at risk of loss or damage to the goods after delivery. The buyer assumes the formalities for the importation of the goods and their transit from any country.
In the CIP incoterm, the seller pays the costs and assumes the risk of loss or damage to the goods until the goods are delivered. The seller enters a contract of carriage and pays the freight to the agreed destination. The seller insures the goods on behalf of the buyer during transportation. The seller deals with export formalities.
In the CIP incoterm, the buyer receives the goods when the seller delivers them to the carrier at the place of loading at the agreed delivery time. The buyer receives the goods from the carrier at the specified destination. The buyer pays the costs other than freight and takes the risk of loss or damage to the goods after delivery. The buyer assumes the formalities for the importation of the goods and their transit from any country. The buyer deals with the import formalities.
In the DAP international incoterm, the seller delivers the goods to the buyer at the buyer's disposal while in the arriving vehicle at the agreed destination. The seller pays the costs and assumes the risk of loss or damage to the goods until the goods are delivered. The seller fulfills the formalities for the export of the goods and their transit from any country prior to delivery.
In the DAP incoterm, the buyer receives the delivery at the agreed destination and unloads the goods from the incoming transport vehicle. The buyer pays the costs and assumes the risk of loss or damage to the goods after delivery. The buyer deals with the import formalities.
In the DPU international incoterm, the seller delivers the goods to the buyer at the agreed terminal, which is unloaded from the arriving vehicle, leaving it at the buyer's disposal. The seller pays the costs and assumes the risk of loss or damage to the goods until the goods are delivered. The seller fulfills the formalities for the export of the goods and their transit from any country prior to delivery.
In the DPU incoterm, the buyer receives the delivery from the specified terminal. The buyer pays the costs and assumes the risk of loss or damage to the goods after delivery. The buyer deals with the import formalities.
In the DDP incoterm, the seller delivers the goods to the buyer, leaving it at the buyer's disposal in the vehicle arriving at the agreed destination. The seller pays the costs and assumes the risk of loss or damage to the goods until the goods are delivered. The seller fulfills the formalities for the export of the goods, transit from any country before delivery and import of the goods.
In the DDP international incoterm, the buyer receives the delivery at the agreed destination and unloads the goods from the incoming transport vehicle. The buyer pays the costs and assumes the risk of loss or damage to the goods after delivery.
In the FAS incoterm, the seller delivers the goods to the buyer by placing them next to the ship at the agreed port of loading within the agreed time. The seller pays the costs and assumes the risks of damage or loss of the goods until the goods are delivered. The seller deals with export formalities. The buyer receives the delivery when the seller places the goods next to the ship at the agreed port of loading.
In the FAS international incoterm, the buyer forms a contract for the transportation of the goods from the agreed port of loading and for the loading of the goods. The buyer pays for the goods and assumes the risk after delivery. The buyer, if any, assumes the import formalities and possible formalities in the country of transit.
In the FOB incoterm, the seller delivers the goods to the buyer by loading them on board at the agreed port of loading within the agreed time. The seller pays the costs and assumes the risks of damage or loss of the goods until the goods are delivered. The seller deals with export formalities.
In the FOB international incoterms, the buyer receives the delivery when the seller loads the goods on board at the port of loading. The buyer forms a contract for the carriage of the goods from the specified port of loading. The buyer pays for the goods and assumes the risk after delivery. The buyer, if any, assumes the import formalities and possible formalities in the country of transit.
The seller delivers the goods to the buyer at the agreed port of shipment within the agreed time by loading it on board alongside the ship. The seller pays the costs and assumes the risks of damage or loss of the goods until they are delivered. The seller forms a contract for the carriage of the goods to the designated port of destination and pays the freight. The seller deals with export formalities. The seller insures the goods on behalf of the buyer during transit from the port of loading to the port of destination.
The buyer receives the delivery when the seller loads the goods on board at the port of loading. The buyer pays for the goods, excluding freight, and assumes the risks after delivery. The buyer, if any, assumes the import formalities and possible formalities in the country of transit.
The seller delivers the goods to the buyer at the agreed port of shipment within the agreed time by loading it on board alongside the ship. The seller pays the costs and assumes the risks of damage or loss of the goods until the goods are delivered. The seller forms a contract for the carriage of the goods to the designated port of destination and pays the freight. The seller deals with export formalities.
The buyer receives the delivery when the seller loads the goods on board at the port of loading. The buyer pays for the goods, excluding freight, and assumes the risks after delivery. The buyer, if any, assumes the import formalities and possible formalities in the country of transit.
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