Incoterms 2024
Freight incoterms (International Commercial Terms) are the standard terms used in sales contracts for importing and exporting. They are used to define responsibility and liability for goods over the course of a shipment. In other words, they spell out when responsibility for the goods transfers from the supplier to the buyer. They also define who pays which costs for the goods and their transport.
"Let's break down each Incoterm"
EXW – Ex Works
FAS – Free Alongside Ship
FCA – Free Carrier
- Seller's responsibility: Minimal. The seller makes the goods available at their premises or another named place for collection arranged by the buyer.
- Buyer's responsibility: Takes care of all transportation, customs clearance, and risks from the seller's premises onwards.
FCA – Free Carrier
FAS – Free Alongside Ship
FCA – Free Carrier
- Seller's responsibility: Prepares the goods for export and delivers them to a carrier or another person nominated by the buyer at a specified place.
- Buyer's responsibility: Assumes responsibility once the goods are delivered to the carrier. Responsible for export clearance and onward transportation.
FAS – Free Alongside Ship
FAS – Free Alongside Ship
FAS – Free Alongside Ship
- Seller's responsibility: Delivers the goods alongside the named vessel at the named port of shipment. The seller clears the goods for export.
- Buyer's responsibility: Takes responsibility once the goods are placed alongside the ship. Responsible for loading, freight costs, and export clearance.
FOB – Free On Board
CIF – Cost, Insurance, and Freight
FAS – Free Alongside Ship
- Seller's responsibility: Delivers the goods on board the vessel nominated by the buyer at the named port of shipment. The seller clears the goods for export.
- Buyer's responsibility: Assumes responsibility once the goods are on board the vessel. Responsible for freight costs, insurance, and import clearance.
CFR – Cost and Freight
CIF – Cost, Insurance, and Freight
CIF – Cost, Insurance, and Freight
- Seller's responsibility: Arranges and pays for the main carriage to the destination port. The seller clears the goods for export.
- Buyer's responsibility: Bears all risks and costs once the goods are on board the vessel. Responsible for insurance and import clearance.
CIF – Cost, Insurance, and Freight
CIF – Cost, Insurance, and Freight
CIF – Cost, Insurance, and Freight
- Seller's responsibility: Similar to CFR but also includes insurance against the buyer's risk of loss or damage to the goods during transit.
- Buyer's responsibility: Assumes responsibility upon delivery of goods on board the vessel. Responsible for import clearance.
CPT – Carriage Paid To
CIP – Carriage & Insurance Paid
CIP – Carriage & Insurance Paid
- Seller's responsibility: Arranges and pays for transportation to the named destination. The seller clears the goods for export.
- Buyer's responsibility: Assumes responsibility upon delivery to the carrier. Responsible for import clearance and onward transportation.
CIP – Carriage & Insurance Paid
CIP – Carriage & Insurance Paid
CIP – Carriage & Insurance Paid
- Seller's responsibility: Similar to CPT but includes insurance against the buyer's risk of loss or damage to the goods during transit.
- Buyer's responsibility: Assumes responsibility upon delivery to the carrier. Responsible for import clearance and onward transportation.
DAT – Delivered at Terminal
CIP – Carriage & Insurance Paid
DAT – Delivered at Terminal
- Seller's responsibility: Delivers the goods, cleared for import, at a named terminal at the destination.
- Buyer's responsibility: Assumes responsibility upon delivery at the named terminal. Responsible for unloading and onward transportation.
DAP – Delivered at Place
DDP – Delivered Duty Paid
DAT – Delivered at Terminal
- Seller's responsibility: Delivers the goods, cleared for import, at the named place of destination.
- Buyer's responsibility: Assumes responsibility upon delivery at the named place. Responsible for unloading and import duties.
DDP – Delivered Duty Paid
DDP – Delivered Duty Paid
DDP – Delivered Duty Paid
- Seller's responsibility: Bears all risks and costs, including duties, customs clearance and delivery to the named place of destination.
- Buyer's responsibility: Assumes responsibility upon delivery at the named place. No further obligations.
So which Incoterms should I use?
Incoterms have been used for international movements for many years but following the events of Brexit and the Northern Ireland Protocol many companies were suddenly required to declare goods in a similar manner when moving between GB to NI and in some cases NI-GB.
As a result many companies who were originally never involved with international shipments found themselves subject to things they previous had no exposure or prior experience in such as commodity codes, import duty and the importance of incoterms.
Every company is different and one incoterm that fits one may not fit another so we are always happy to have a conversation and discuss your options to help find the right option and choice for your company.
"Get in touch today and we will be happy to help"
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