INCOTERMS

International transport rules

The main task of Incoterms is to standardize and optimize the terms of international supply contracts to bring them into line with the laws of all countries participating in the contract. Incoterms have the status of an international normative act and are published in the form of a dictionary.

The definition of common rules was one of the first initiatives of the International Chamber of Commerce (ICC) after its creation in 1919.
In the early 1920s, the ICC tried to understand the trade terms used by international merchants in their transactions. The studies were carried out in 13 different countries. The conclusions were published in 1923 in the form of the first six rules, which became the forerunners of the future rules of Incoterms. The terms FAS, FOB, FOT, FOR, CIF and C&F (CNF) became them.

In 1928, a second study was carried out to study the discrepancies, the scope was expanded to the interpretation of trade terms used in more than 30 countries. Based on the results of these studies, the first version of the Incoterms rules was published in 1936, which included trade terms: FAS, FOB, C&F (CNF), CIF, EXS and EXQ.

Subsequently, a new edition of Incoterms appeared once a decade, starting from the 50s of the last century.
The text of the rules published in 2020 is relevant today. At the moment, there are 11 terms (divided into 4 groups) on the basis of which a foreign trade contract is drawn up.

Incoterms® Incoterms® is a registered trademark of the International Chamber of Commerce (ICC). The interpretation of Incoterms on our website is not original and differs from the official translation, the copyright for the original text belongs to the International Chamber of Commerce.

EXW
(English ex works, ex-warehouse, ex-factory). “Pickup” or category of transportation, where the free point, that is, the place of transfer of responsibility from the supplier to the recipient, is directly the seller’s warehouse.
FCA
(English free carrier, free carrier). A regime that obliges the seller to deliver the goods to the place of receipt by the carrier in accordance with the terms of the contract (payment of export duties is the responsibility of the supplier).
CPT
(eng. carriage paid to.., carriage paid to..). Payment for the main part of the carriage, that is, to the point of arrival, lies with the seller, who, in accordance with the contract, delivers the goods to the carrier (expenses for insurance and customs fees, import and customs clearance fees on the buyer).
CIP
(eng. carriage and insurance paid to .., transportation and insurance paid to ..). Delivery mode, almost similar to the CPT category, the difference lies in the obligation to pay insurance on the seller.
DAT
(English delivered at terminal, delivery to the terminal). The distribution of costs between the seller and the buyer: the first pays for delivery to the arrival terminal and export payments and insurance fees, the second – customs clearance and the rest of the transportation to the destination.
DAP
(English delivered at place, delivery to the place). Delivery of goods to the destination with the obligation to pay import duties and taxes to the address of the recipient state on the buyer.
DDP
(English delivered duty paid, delivery with payment of duties). Delivery of goods to the destination with the imposition of costs on the seller in full.
FOB
(English free on board, free board). Shipment of goods to a vessel owned by the buyer or paid for by him, while paying for part of the delivery to the terminal is the responsibility of the seller.
FAS
(eng. free alongside ship, freely along the side of the ship). Delivery of goods to the buyer’s ship without shipment. The burden of paying for shipment and delivery lies with the recipient.
CFR
(English cost and freight, cost and freight). Transportation of cargo to the port specified in the contract. All costs for delivery, payment of insurance, unloading and transshipment operations are borne by the buyer himself.
CIF
(English cost, insurance and freight, cost, insurance and freight). Delivery mode similar to CFR category, however insurance premiums are the responsibility of the seller.