Incoterms specified on shipping documents define the responsibilities of each party for transportation, insurance, and risk of loss. Most importantly, they determine who is legally accountable for the payment of import duties and taxes, thereby identifying the Importer of Record.
- EXW-Ex Works(named place of delivery): This term places the maximum obligation on the buyer and minimum obligation on seller. Buyer assumes all responsibilities and pay all costs for bringing the goods to their final destination once cargo is collected at named place.
- FCA-Free Carrier(named place of delivery): The seller delivers the goods, cleared for export at a named place, buyer is responsible for loading goods for export and bear all costs and risks for arriving final destination.
- CPT-Carriage Paid To(named place of destination): The seller is responsible for origin costs including export clearance and freight costs for carriage to the named place (either final destination or at port of arrival). Buyer is responsible for transportation at destination and import clearance.
- CIP-Carriage and Insurance Paid to (named place of destination): This term is broadly similar to the above CPT term, with the exception that the seller is required to obtain insurance for the goods while in transit. CIP requires the seller to insure the goods for 110% of the contract value, under Institute Cargo Clauses (A) of the Institute of London Underwriters or any similar set of clauses.
- DPU-Delivered at Place Unloaded (named place of destination): This Incoterm requires that the seller delivers the goods, unloaded, at the named place of destination. The seller covers all the costs of transport (export fees, carriage, unloading ) and assumes all risk until arrival at the destination port or terminal. All charges after unloading (for example, import duty, taxes, customs and on-carriage) are to be borne by buyer
- DAP-Delivered At Place(named place of destination): The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. Under DAP terms, the risk passes from seller to buyer from the point of destination mentioned in the contract of delivery. After arrival of the goods in the country of destination, the customs clearance in the importing country needs to be completed by the buyer.
- DDP-Delivered Duty Paid(named place of destination): Seller is responsible for delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination, but the seller is not responsible for unloading. However, the most important consideration for DDP terms is that the seller is responsible for clearing the goods through customs in the buyer's country, including both paying the duties and taxes, and obtaining the necessary authorizations and registrations from the authorities in that country.
- FAS-Free Alongside Ship(named port of shipment): The seller delivers when the goods are placed alongside the buyer's vessel at the named port of shipment and requires the seller to clear the goods for export. Buyer must bear all costs and risks of loss of or damage to the goods from that moment.
- FOB-Free on Board (named port of shipment): The seller bears all costs and risks up to the point the goods are loaded on board the vessel including export clearance. The buyer pays cost of marine freight transportation, bill of lading fees, insurance, import clearance ,unloading and transportation cost from the arrival port to destination.
- CFR-Cost and Freight (named port of destination): The seller pays for the carriage of the goods up to the named port of destination. Risk transfers to buyer when the goods have been loaded on board the ship in the country of Export. The seller is responsible for origin costs.The buyer pays the cost of unloading and transportation from arrival port to destination including import clearance.
- CIF-Cost , Insurance & Freight (named port of destination): CIF is broadly similar to the term CFR, with the exception that the seller is required to obtain insurance for the goods while in transit.