Incoterms

Incoterms are a set of international rules created by the International Chamber of Commerce to determine the scope of the commercial clauses of the international purchase and sale agreements. Their aim is to facilitate the interpretation of the terms most commonly used in foreign trade. They are also called price clauses since they determine the seller and buyer obligations in each transaction.
The first Incoterms’ publication was made in 1936, being modified in several occasions, until its last alteration in 2000. Changes were due to updating the most common expressions, especially due to the introduction of new technologies and transport methods.
There are four Incoterms categories according to the initial letter of the abbreviations used which indicates the obligations to be fulfilled and who is the responsible in each case:

Group C:

The seller contract the main transport, but is not responsible for the goods after its loading and dispatch for export.
See Code

Group D:

The seller is responsible for the goods until they reach the destination.
See Code

Group E:

The seller, from his plant, warehouse, etc, makes available the goods, which are the purpose of the contract, to the buyer.
See Code

Group F:

The seller delivers goods to the transportation indicated by the buyer, without paying principal transport.
See Code

• Group E
  • EXW. EX WORKS (...named place):
    The buyer is responsible for all charges and risks from the delivery of the goods performed by the seller
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• Group F
  • FCA. FREE CARRIER (... named place):
    The seller delivers goods cleared for export to the carrier named by the buyer, in a named placed.
  • FAS. FREE ALONGSIDE SHIP (… named port of shipment):
    The seller delivers goods alongside ship. From this moment, buyer is responsible for charges.
  • FOB. FREE ON BOARD (… named port of shipment):
    Seller delivers goods on board in the port of shipment. From that moment buyer is responsible for all charges and for lost or damage risks.
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• Group C
  • CAF. COST AND FREIGHT (...named port of destination):
    The seller must pay the necessary charges and freight until goods reach the port of destination, but buyer is responsible for the lost or damage risk.
  • CIF. COST INSURANCE AND FREIGHT (…named port of destination):
    The seller should pay the necessary charges and freight in order goods reach the port of destination. The seller is also responsible for a minimum insurance covering the lost or damage risks of the goods during transportation.
  • CPT. CARRIAGE PAID TO (…named place of destination):
    The seller delivers goods to the named transport, and must pay the charges for the transportation. Buyer assumes all risks and other charges incurred after the goods have been delivered.
  • CIP. CARRIAGE AND INSURANCE PAID TO (…named place of destination):
    The seller delivers goods to the transport, must pay the charges for transportation to destination, and is responsible for an insurance covering lost or damage risks of the goods.
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• Group D
  • DAT. DELIVERED AT TERMINAL (…named port):
    The incoterm DAT is used for all types of transport. It is one of the two new Incoterms 2010 with DAP. It replaces the incoterm DEQ.
    The seller is responsible for all costs, including the main carriage and insurance (not required), until the goods are placed in the terminal set. It also assumes the risks up to this moment.
    DEQ Incoterm was used sharply in the international trade of bulk because the delivery point coincides with the bulk terminals of the ports. (In earlier versions of Incoterms 2000, the DEQ Incoterms, payment of import duty was paid by the seller, in the current version is paid by the buyer).
  • DAP. DELIVERED AT PLACE (… named destination place):
    The Incoterm DAP is used for all types of transport. It is one of the two new Incoterms 2010 with DAT. Replaces Incoterms DAF, DDU and DES.
    The seller is responsible for all costs, including the main carriage and insurance (not required), until the goods put at the disposal of the buyer in a vehicle ready for download. It also assumes the risks up to this moment.
  • DDP. DELIVERED DUTY PAID (... named place of destination):
    The seller delivers goods to buyer cleared for import and unloaded from the transportation. Seller is responsible for all charges and risks of taking cargo to the named place including responsibility and risks to carry out Customs procedures, procedures and Customs fees payment, taxes, and other charges. As for the seller, this term represents the maximum responsibility.
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