Incoterms are international rules which specify:

  • The cost of transportation paid by seller or buyer.
  • Where the risk of the loss is transferred from seller to buyer.
  • Who assumes the customs formalities.
  • Who pays the customs duties.
  • Who must make insurance coverage.

There are 11 Incoterms distributed in four categories:

  • E (EXW): The seller minimizes risk and cost by making goods available to the buyer at the seller’s own premises.
  • F (FCA, FAS, FOB): The seller delivers to a carrier appointed by the buyer.
  • C (CFR, CIF, CPT, CIP): The seller contracts for carriage without assuming risk of loss or damage or the additional costs due to events after the loading.
  • D (DAT DAP, DDP): The seller bears all costs and risks to the agreed destination.