Incoterms Meaning in Import, Export And Moving Goods

Whether you are going to import or export your goods from one country to another, incoterms always come into play. These are special terms which help to identify the type of shipment you have.  If you are unfamiliar with what they are, our guide for beginners would certainly help. This would be definitely useful for international shipping purposes like moving houses.

International Commercial Terms (incoterms) were first introduced in 1936, with the latest revision taking effect from 2010, known as Incoterms-2010. Essentially, there are 11 incoterms and they help the importer and exporter identify who is responsible for each stage of the shipment, such as the cost and risks. It is okay if you do not get it yet, read on and it will all be clear for you. Do comment and share this article if you find it useful!

Incoterm 1: EXW (Ex-works)

This term means that the buyer of the goods (Importer) is responsible for the entire shipping process. In other words, the seller is only responsible for preparing the goods for shipment. The buyer is responsible to bring the goods from the factory to the port of shipment, then loading into the ship to bring it to the buyer’s country

Incoterm 2: FCA (Free Carrier)

The seller is only responsible up to the point of handing over the goods to the carrier for transportation to  the port  of shipment. The buyer is responsible for paying for  the carriage and the risk passes to him as well, until the buyer receives the goods. Lastly, the buyer pays for insurance

Incoterm 3: CPT (Carriage Paid  To)

This is where the seller pays for the carriage process and insurance. However, the risk lies in the hands of the buyer when the first carrier handles the goods to transport to the port of shipment

Incoterm 4: CIP (Carriage and Insurance Paid To)

This is usually popular in multi modal shipments. The seller is responsible for carriage and insurance costs until the goods have been delivered. The buyer on the other hand, is in charge of the risks when the freight forwarder has the goods.

Incoterm 5: DAT (Delivered At Terminal)

The seller pays for the costs until the arrival terminal. The seller  also bears the risk until the good have been unloaded. After which, the buyer becomes responsible.

Incoterm 6: DAP (Delivered At Place)

Similar to the previous incoterm, this incoterm requires the seller to pay for all costs and bear risks right BEFORE the goods have been unloaded. The risks passes to the buyer when the goods are being unloaded onwards.

Incoterm 7: DDP (Delivered Duty Paid)

This is the incoterm where the seller pays for all the costs and bears the risks  until the goods have reached the buyer’s destination. The buyer then handles the responsibility of unloading onward.

Incoterm 8: FAS (Free Alongside Ship)

The exporter bears the responsibility of clearing the goods for export. The buyer (importer) is responsible for transportation from the port of shipment onwards, He also bears the responsibility. Do note that this incoterm is only used for cargoes.

Incoterm 9: FOB (Free On Board)

The exporter is responsible for the goods up to the point of loading at the port of shipment for the cost and risk. After which, the importer bears the cost and responsibility. This incoterm can only be used for sea freight only.

Incoterm 10: CFR (Cost And Freight)

Like FOB, this incoterm is only limited to sea freight. The exporter pays for transportation until the port of destination but bears risks until the point of the goods being loaded at the port of shipment. The importer is responsible for the risks after that and pays for insurance too.

Incoterm 11: CIF (Cost Insurance and Freight)

The final Incoterm is also only valid for sea freight. This incoterm requires the seller (exporter) to pay for the pre carriage and main carriage until the goods have reached the port of destination. He also has to pay for insurance for those stages as well. However he no longer bears risks after the goods have been loaded on port of shipment, to the importers destination.

So those are the 11 Incoterms-2010 used when exporting or importing from one destination or another. If you have anything to share, do comment below! For those who have questions with regards to what Kargo does you can click here .