Incoterms guide
Who pays for transport and insurance, and where the risk passes, in plain words.
Rules for any transport
| Rule | Main freight paid by | Insurance | Risk passes to buyer | Export customs | Import customs |
|---|---|---|---|---|---|
| EXW Ex Works | Покупатель | Покупатель | At the seller’s place, not loaded | Покупатель | Покупатель |
| FCA Free Carrier | Покупатель | Покупатель | Handed to the buyer’s carrier at the named place | Seller | Покупатель |
| CPT Carriage Paid To | Seller | Покупатель | Handed to the first carrier | Seller | Покупатель |
| CIP Carriage and Insurance Paid To | Seller | Seller | Handed to the first carrier | Seller | Покупатель |
| DAP Delivered at Place | Seller | Seller * | At the destination, ready to unload | Seller | Покупатель |
| DPU Delivered at Place Unloaded | Seller | Seller * | At the destination, after unloading | Seller | Покупатель |
| DDP Delivered Duty Paid | Seller | Seller * | At the destination, ready to unload, import duties paid | Seller | Seller |
* Under DAP, DPU and DDP the seller carries the risk until delivery, so the seller usually insures, but no rule requires it. Under CIF the seller must buy at least basic cover; under CIP, wider cover.
Rules for sea and inland waterway
| Rule | Main freight paid by | Insurance | Risk passes to buyer | Export customs | Import customs |
|---|---|---|---|---|---|
| FAS Free Alongside Ship | Покупатель | Покупатель | Next to the ship at the port of loading | Seller | Покупатель |
| FOB Free On Board | Покупатель | Покупатель | On board the ship at the port of loading | Seller | Покупатель |
| CFR Cost and Freight | Seller | Покупатель | On board the ship at the port of loading | Seller | Покупатель |
| CIF Cost, Insurance and Freight | Seller | Seller | On board the ship at the port of loading | Seller | Покупатель |
The table scrolls sideways on small screens.
Tips for organic commodity deals
- Always write the Incoterm with a place and the year, for example “CIF Rotterdam, Incoterms 2020”.
- Compare offers on the same basis. A FOB price and a CIF price for the same goods are not the same deal.
- Agree who arranges the organic paperwork, such as the certificate of inspection for the EU, and the lab tests.
Incoterms® is a trademark of the International Chamber of Commerce (ICC). This is a short summary in our own words; the full rules are published by the ICC.
Вопросы
Which Incoterms are most used for organic commodities?
FOB, CFR and CIF are common for sea shipments of bulk goods. FCA, CPT and CIP fit container shipments better, because the goods are handed over at a terminal, not loaded by the seller onto the ship.
What is the difference between CFR and CIF?
In both, the seller pays the sea freight and the risk passes to the buyer when the goods are on board at the port of loading. Under CIF the seller must also buy insurance for the buyer.
Does an Incoterm say when I pay?
No. Incoterms cover delivery, costs and risk. Payment terms, such as a letter of credit or cash against documents, are agreed separately in the contract.
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