Incoterms (International commerce terms) are international rules for the interpretation of the most widely used trade terms in the field of foreign economic activity. International trade terms are standard terms of an international sales contract that are defined in advance in an internationally-recognized document.
In 2010 the International Chamber of Commerce announced a new edition on the use of national and international trade terms. Incoterms rules reflect current trends in international trade since the last edition of the rules in 2000.
As far as terms are concerned, they can be divided into four groups:
- Group E – Departure
o EXW – Ex Works – goods from the seller’s warehouse
- Group F – Main Carriage Unpaid
o FCA – Free Carrier – goods delivered to the carrier of the customer
o FAS – Free Alongside Ship – goods delivered to the customer’s ship
o FOB – Free On Board – goods are loaded on the customer’s ship
- Group C – Main Carriage Paid
o CFR – Cost and Freight – good delivered to the customer’s port (not unloaded)
o CIF – Cost, Insurance and Freight – the goods are insured and delivered to the customer’s port (without unloading).
o CPT – Carriage Paid To – goods are delivered to the customer’s carrier at a named destination.
o CIP – Carriage and Insurance Paid to – goods are insured and delivered to the customer’s carrier at a named destination.
- Group D – Arrival
o DAP – Delivered at Place
o DAT – Delivered at Terminal
o DDP – Delivered Duty Paid
Yes, there are lots of abbreviations and it’s hard to remember them all, but unfortunately or gladly it’s an optimal system, which is almost unchangeable in its structure (of course there are innovations, but they are not significant, and the essence is the same).