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Incoterms were first published way back in 1936, they’re a set of 11 rules defining which party is responsible for what during international transactions. The terms spell out all the tasks, risks and costs involved during the transaction of goods from seller to buyer. The most common Incoterms are EXW, DAP & DDP. Incoterms are important because they’re known and accepted by the whole world. Also they are a requirement on every single commercial invoice, this is because they greatly reduce the risk of potentially costly misunderstandings. Below you will find all Incoterms explained. The seven most common Incoterms for any mode(s) of transport are:

EXW – Ex Works
The buyer bears all costs and risk from the loading point to end destination. The seller’s only job is to make sure the buyer can access the goods at an agreed location.

FCA – Free Carrier
It is up to the seller to make the goods available, at his own cost and risk, at an agreed location. The seller is also responsible for the export clearance of the goods. The point at which the cost and risk shifts to the buyer is once they received the goods at the agreed location.

CPT – Carriage Paid to
Seller has same responsibilities as at FCA, but also bears the transportation costs to the agreed destination place. The point at which the cost and risk shifts to the buyer is once the cargo arrived to the agreed destination.

CIP – Carriage and Insurance Paid To
Seller has same responsibilities as with CPT, but also bears the cost for insurance with a high coverage ratio. The point at which the cost and risk shifts to the buyer is once the cargo arrived to the agreed destination.

DAP – Delivered at Place
Seller bears the cost and risk of shipping to the agreed destination address. Goods are considered delivered as soon as they are ready to be unloaded. The point at which the cost and risk shifts to the buyer is once the goods are ready for unloading.

DPU – Delivered at Place Unloaded
Seller has the same responsibilities as with DAP, but also bears the cost and risk for unloading the cargo at the agreed destination address. The buyer is responsible for the import customs clearance including duties and taxes. The point at which the cost and risk shifts to the buyer is once the goods are unloaded at the agreed location.

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Incoterms explained

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