Mastering the Seas

International Commercial Terms, commonly known as Incoterms, are a set of standardized terms used in international trade to define the responsibilities and obligations of buyers and sellers. They help facilitate smooth transactions by providing a common understanding of shipping and delivery terms. Here's a simplified explanation of some common Incoterms:

EXW (Ex-Works):

Seller's Responsibility: Make the goods available at their premises or another named place (like a factory).

Buyer's Responsibility: Takes care of all transportation costs and risks from the seller's location to the final destination.

FOB (Free On Board):

Seller's Responsibility: Deliver the goods to the port of shipment and cover the costs until that point.

Buyer's Responsibility: Takes responsibility from the port of shipment onwards, including the transportation and any additional costs.

CIF (Cost, Insurance, and Freight):

Seller's Responsibility: Covers the cost of the goods, insurance, and freight (shipping) to the named port of destination.

Buyer's Responsibility: Takes over from the port of destination, including customs clearance and onward transportation.

DDP (Delivered Duty Paid):

Seller's Responsibility: Delivers the goods to the buyer's premises, taking care of all costs and responsibilities, including customs duties and taxes.

CPT (Carriage Paid To):

Seller's Responsibility: Pays for the transportation of the goods to the named destination.

Buyer's Responsibility: Takes over the risk and any additional costs from the destination point.

DAP (Delivered at Place):

Seller's Responsibility: Delivers the goods to a named place, ready for unloading, but not cleared for import.

Buyer's Responsibility: Takes care of import customs clearance, duties, and transportation from the named place.

Remember, these terms are just a snapshot of the Incoterms, and the specific responsibilities can vary based on the agreement between the buyer and the seller. It's crucial to clearly define the chosen Incoterms in the sales contract to avoid misunderstandings and disputes.