INCOTERMS: A Guide

Making trade terms clearer and trade easier

INCOTERMS, are a set of international rules for the interpretation of the most commonly used trade terms. Applying INCOTERMS to sale and purchase contracts facilitates global trade and helps traders globally understand one another. When global companies enter into contracts to trade goods they are free to negotiate specific terms like price, quantity, and characteristics of the goods. Every international contract also contains what is referred to as an Incoterm, or international commercial term. There are 13 main terms and several secondary terms that denote the points at which shipper, carrier, and consignee risk and responsibility start and end. The transacting partners select the INCOTERMS, which determine who pays the cost of each transportation element, who is responsible for loading and unloading of goods, and who bears the risk of loss at any given point during an international shipment. Here is our quick Guide to the main INCOTERMS.

Goods available at Seller’s Premises. Buyer pays all transportation, duties, insurance. Risks are for buyer immediately after purchase and on leaving premises. No loading or clearing charges included.

Seller clears goods for export and delivers them to Carrier at place specified by Buyer. If loading is at Seller, Seller loads. Otherwise all loading and shipping costs are for Buyers account.

Seller delivers to and loads at and clears customs at port of Export. Risk is for Buyer the moment the goods pass the ships rails. Thereafter all transport, insurance costs and duties at port of import are for Buyers Account

Seller responsible for clearing goods for export, delivering past ship rails and paying international freight charges. Risk for Buyer once goods pass ships rail. Buyer pays insurance, unloading, customs clearance and delivery to final destination.

Seller is responsible for delivering the goods onto the vessel of transport and clearing customs in the country of export. Seller also responsible for purchasing insurance, in favour of Buyer. Risk is for Buyer the moment the goods pass the ships rails. Thereafter all transport, insurance costs and duties at port of import are for Buyers Account

Seller clears the goods for export, delivers them to the carrier, and is responsible for carriage costs to the named place of destination. Risk of loss transfers to the buyer once the goods are transferred to the carrier and the buyer must insure the goods from that time on.

Seller transports the goods to the port of export, clears customs, and delivers them to the carrier. From that point, risk of loss shifts to the buyer. The seller is responsible for carriage and insurance costs to the named place of destination. The buyer is responsible for all costs, and bears risk of loss from that point forward.

Seller is responsible for all origin formalities and charges, international carriage, and the port charges at destination. Risk transfers when the goods have been unloaded from the vessel. The buyer is responsible for customs clearance, payment of duties and taxes, and final delivery.

Seller is responsible for all transport costs involved in delivering the goods to a named place of destination. At this point the goods are placed at the disposal of the buyer (usually the buyer’s nominated unpack depot). The buyer, or importer, assumes risk of loss at that point and is responsible for customs clearing the goods and paying any outstanding duties or taxes.

Seller is responsible for door-to-door delivery, and also provides customs clearance at both origin and destination. The seller bears the risk and responsibility for the goods up until the point whereby the goods at delivered to the buyer’s premises.

INCOTERMS: A Guide

Making trade terms clearer and trade easier

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