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Incoterms®
Incoterms® are a set of 11 rules established every 10 years by the International Chamber of Commerce (ICC). Each Incoterm details buyers' and sellers' duties and obligations in the international sale of goods.
Most importantly, each rule simplifies the tasks, costs, and risks the buyer or seller bears in each transaction.
The 2020 Incoterms® are separated into four categories and two transportation types.
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Categories of Incoterms
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Category C - Main Carriage Paid
The seller assumes risk and cost while the goods are in transit. The seller is no longer responsible for once the goods are loaded onto a transport vehicle.
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Cost And Freight - CFR
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Cost, Insurance, And Freight - CIF
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Carriage Paid To - CPT
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Carriage And Insurance Paid To - CIP
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Category D - Arrival
The seller is responsible for all transportation costs and must deliver the goods to the agreed-upon destination. Any mode of transport can be used in Category D.
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Delivered At Terminal - DAT
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Delivered At Place - DAP
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Delivered Duty Paid - DDP
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Category E - Departure
Category E assigns most of the responsibility to the buyer. After the seller makes the goods available at an agreed-upon location, the buyer must load and clear the goods for export.
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EX Works - EXW
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Category F - Main Carriage Unpaid
The seller is responsible for delivering the goods to the buyer's desired location. As soon as the goods are delivered, the buyer assumes responsibility.
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Free Carrier - FCA
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Free Alongside Ship - FAS
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Free On Board - FOB
Incoterms® 2020 will not apply unless incorporated into the contract of sale by clearly specifying that the contract is governed by Incoterms® 2020. Incoterms® are ICC’s standard definitions of trade terms and are internationally recognized as indispensable evidence of the buyer’s and seller’s responsibilities for delivery under a sales contract. This is a basic guide, we recommend you refer to the Handbook created by the ICC - International Chamber of Commerce for more detailed information regarding Incoterms® 2020. http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2020