FAQs
WHAT ARE THE INCOTERMS FOR WHOLESALE TRADING
Incoterms (International Commercial Terms) are a set of rules established by the International Chamber of Commerce (ICC) that define the responsibilities of sellers and buyers in international trade. They outline who is responsible for the transportation costs, insurance, duties, and where the transfer of risk occurs from the seller to the buyer. Here are the main Incoterms used in wholesale trading as of the latest update:
EXW (Ex Works)
- Seller's Responsibility: Minimum responsibility. The seller makes the goods available at their premises.
- Buyer's Responsibility: All costs and risks from the seller's premises to the final destination, including loading the goods onto transport.
FCA (Free Carrier)
- Seller's Responsibility: Delivers goods to a carrier or another party nominated by the buyer at the seller’s premises or another named place.
- Buyer's Responsibility: All costs and risks from that point onwards.
CPT (Carriage Paid To)
- Seller's Responsibility: Pays for carriage to the named place of destination.
- Buyer's Responsibility: Bears all risks and additional costs after the goods are handed over to the first carrier.
CIP (Carriage and Insurance Paid To)
- Seller's Responsibility: Pays for carriage and insurance to the named place of destination.
- Buyer's Responsibility: Bears all risks after the goods are handed over to the first carrier.
DAP (Delivered at Place)
- Seller's Responsibility: Delivers when the goods are placed at the disposal of the buyer at the named place of destination. The seller bears all risks involved in bringing the goods to the named place.
- Buyer's Responsibility: Unloading costs and import duties/taxes.
DPU (Delivered at Place Unloaded)
- Seller's Responsibility: Delivers when the goods are unloaded at the named place of destination.
- Buyer's Responsibility: Import duties/taxes.
DDP (Delivered Duty Paid)
- Seller's Responsibility: Bears all costs and risks including import duties/taxes to deliver the goods to the buyer’s premises.
- Buyer's Responsibility: Minimum responsibility, just to receive the goods.
FAS (Free Alongside Ship)
- Seller's Responsibility: Delivers goods alongside the vessel at the named port of shipment.
- Buyer's Responsibility: All costs and risks from that point onwards.
FOB (Free On Board)
- Seller's Responsibility: Delivers goods on board the vessel at the named port of shipment.
- Buyer's Responsibility: All costs and risks from that point onwards.
CFR (Cost and Freight)
- Seller's Responsibility: Pays the costs and freight to bring the goods to the port of destination.
- Buyer's Responsibility: Bears the risks once the goods are on board the vessel.
CIF (Cost, Insurance and Freight)
- Seller's Responsibility: Pays the costs, freight, and insurance to bring the goods to the port of destination.
- Buyer's Responsibility: Bears the risks once the goods are on board the vessel.
Summary Table
Incoterm | Seller's Responsibility | Buyer's Responsibility |
---|---|---|
EXW | Goods at seller’s premises | All costs and risks from premises |
FCA | Delivery to carrier | All costs and risks from that point |
CPT | Carriage to destination | Risks after first carrier |
CIP | Carriage and insurance | Risks after first carrier |
DAP | Delivery to destination | Unloading, import duties |
DPU | Unloaded at destination | Import duties |
DDP | All costs and risks, duties | Receive goods |
FAS | Alongside ship | All costs and risks from that point |
FOB | On board the ship | All costs and risks from that point |
CFR | Costs and freight | Risks once on board |
CIF | Costs, freight, insurance | Risks once on board |
These terms provide a standardized way to outline and negotiate the terms of international trade contracts, ensuring clarity and reducing disputes over who is responsible for various aspects of the transportation and delivery process.