Incoterms or International Commercial Terms was used as international
and domestic trade contracts. There are 7 mains popular Incoterms rules.
EXW
- Ex-Work -
Importer: The buyers take all responsibility on
shipping and transportation cost from the seller's factory to
the buyer's factory.
Exporter: The sellers don't need to pay any delivery cost.
FOB
- Free on Board -
This rule is the most popular rule in international trade!
Importer: The buyers take responsibility on
transportation cost after the goods loaded on board
or put on a shipping vessel.
Exporter: The sellers takes responsibility on the cost of
shipping, custom documents, and loading the goods on board at their side.
Note: This rule is applied just only
in ocean freight.
FCA
- Free Carrier -
Importer: The buyers takes all responsibility on
shipping and transportation cost as EXW term, except only export
entry document at the sellers side.
Exporter: The sellers pays just only export entry
or the document that the custom requires before proceeding export.
CIF
- Cost, Insurance, Freight -
Importer: The buyers pay only the part of shipping,
custom documents, and tax tariff at their side.
Exporter: The sellers take responsibility on delivery cost
from their factory to freight cost, including insurance.
DDU
- Deliveries Duty Unpaid -
Importer: Importers pay only import tariff
duties and taxes at their side.
Exporter: Exporters takes responsibility on all delivery cost
and some extra costs in importers' country, except import duties and taxes.
Note: Some province in each country charges
some extra costs such as carriage, insurance, custom clearance and other
expenses up to the province that the goods pass.
DAP
- Delivered at Place -
Importer: Importers pay import tariff duties and taxes
at their side, including extra costs in importers province.
Exporter: Exporters takes responsibility on all delivery cost
from exporter's factory to importer's factory, except import duties and taxes.
Note: DAP is launched in
order to transfer extra costs in DDU term to importer.
DDP
- Delivered at Place -
Importer: The buyers don't pay any delivery cost.
Exporter: The sellers take all responsibility on delivery cost from
the seller's factory to the front of buyer's factory.
