Incoterms

 

How do I use Incoterms?

When incorporating Incoterms into a sales contract you will need two components: 1) the abbreviated name of the rule/term you’re using and 2) a named place.

All 11 of the Incoterms rules require one of the four named places:

1. Place of delivery
2. Place of destination
3. Port of shipment
4. Port of destination

In the example below, FCA stands for “Free Carrier” and the rest of the entry specifies the “named place of delivery” required in the rule.

Example: FCA, Generic Cargo Terminal, Chicago O’Hare International Airport (ORD), USA

Shipping Terms Abbreviation Groups

The list below breaks down the 11 Incoterms rules into four color-coded categories for easy navigation and understanding.

Note that while the Incoterms FAS, FOB, CFR and CIF are applicable to only sea or inland waterway transport, all other terms can be used for all modes of transportation—air, ground, rail and ocean.

You’ll find the named place required for each rule in the parentheses after the rule’s name.

E terms - Departure

• EXW - Ex Works (Place of Delivery, Usually Seller’s Premises)

F terms - Main Carriage Unpaid

• FCA - Free Carrier (Place of Delivery)
• FAS - Free Alongside Ship (Port of Shipment)
• FOB - Free On Board (Port of Shipment)

C terms - Main Carriage Paid

• CFR - Cost and Freight (Port of Destination)
• CIF - Cost, Insurance and Freight (Port of Destination)
• CPT - Carriage Paid To (Place of Destination)
• CIP - Carriage and Insurance Paid To (Place of Destination)

D terms - Arrival

• DPU - Delivered at Place Unloaded (Place of Destination, Where Seller Unloads)
  • Formerly: DAT - Delivered At Terminal (Terminal at Port or Place of Destination)
• DAP - Delivered At Place (Place of Destination)
• DDP - Delivered Duty Paid (Place of Destination)