What are Incoterms
The term INCOTERMS is an abbreviation for International Commerce Terms. Created in 1936 by the International Chamber of Commerce (ICC), these terms consist of three-digit acronyms that indicate the delivery point of goods and the responsibilities of each party involved in transportation costs, as well as tax and other information. They are present throughout the logistics sector and apply to the declared prices of goods of any kind, especially bulk goods. Check out the most commonly used INCOTERMS, their applications and their rules below!
(Ex Works)
Responsibility for transportation lies with the buyer/importer, who must assume the risks and insure the goods.
(Free Carrier)
Responsibility for transporting the cargo lies with the seller/exporter, who assumes the costs and risks of loss or damage.
(Free Alongside Ship)
The exporter assumes the risk of the cargo within their country until it is alongside the ship, when it becomes the responsibility of the buyer/importer.
(Free on Board)
The exporter assumes the risk of the cargo within their country until it is loaded onto the ship, at which point it becomes the responsibility of the buyer/importer.
(Carriage Paid to)
The exporter is responsible for the cargo until it arrives to the place designated by the buyer.
(Carriage and Insurance Paid to)
The exporter is responsible for transport insurance and for the cargo until it reaches the place designated by the buyer.
(Cost and Freight)
The exporter is responsible for the costs and risks of the goods within their country until they are loaded onto the ship, at which point they are only responsible for the cost of the main transport.
(Cost Insurance and Freight)
Suitable for bulk goods, the exporter is responsible for the entire journey of the cargo, except for marine insurance, which is paid by the importer.
(Delivered at Place)
All the costs and risks of the goods up to final delivery at destination are the responsibility of the exporter, with the exception of import customs clearance.
(Delivered at Place Unloaded)
The exporter is responsible for all export taxes and the international transit of the cargo until it’s unloaded at the terminal. Term defined as a replacement for DAT*
(Delivered Duty Paid)
The exporter is responsible for all costs and risks, including customs duties, and the importer only takes care of unloading the goods and import permits. It is not accepted for imports.
* With the difference that the DAT determined “delivery” exclusively at cargo terminals, while the DPU could be used at terminals or any other specific location (example: the buyer’s warehouse).
** Due to the fact that the foreign seller does not have the legal conditions to arrange clearance for the goods to enter the country, this term cannot be used in Brazilian imports, and the DPU or DAP should be chosen in the case of preference by condition.