Incoterms Made Simple

Incoterms define who pays for shipping, insurance, and customs, and where the responsibility transfers from seller to buyer.

1. EXW – Ex Works

• Seller makes goods available at their premises.

• Buyer handles everything else (transport, export, import).

  
  

  Think: “You pick it up from my warehouse.”

2. FCA – Free Carrier

• Seller delivers goods to a carrier or place nominated by the buyer.

• Responsibility transfers once goods are handed over.

  
  

  Think: “I hand it to your transporter.”

3. DAP – Delivered at Place

• Seller delivers goods to the buyer’s location.

• Buyer handles import duties and customs.

  
  

  Think: “I bring it to your door, you clear customs.”

4. DDP – Delivered Duty Paid

• Seller delivers goods to buyer’s location including all duties, taxes, and customs.

  
  

  Think: “I handle everything, you just receive the goods.”

5. FOB – Free On Board

• Seller loads goods on board the ship.

• Buyer takes responsibility once goods are on the vessel.

  
  

  Think: “I put it on the ship, then it’s yours.”

6. CFR – Cost & Freight

• Seller pays cost & freight to destination port.

• Risk transfers once goods are on the ship.

  
  

  Think: “I pay for shipping, but risk is yours after loading.”

7. CIF – Cost, Insurance & Freight

• Same as CFR, but seller also pays insurance.

  
  

  Think: “I pay shipping + insurance, risk passes after loading.”

8 . DDU (Delivered Duty Unpaid) means:

• The seller ships the goods to the buyer’s country.

• The seller pays for transport to the destination.

• The buyer is responsible for import duties, taxes, and customs clearance.

💡 Quick Tips:

• E-terms: Buyer does most work (EXW).

• D-terms: Seller does most work (DAP/DDP).

• F/O/C: For sea/river transport only (FAS, FOB, CFR, CIF).