What is an Incoterm?

Incoterms is an abbreviation of international commercial terms.  Incoterms are an internationally recognised 3 letter trade terms that best describe the practical arrangements for the delivery of goods between a seller & buyer, outlining the obligations, costs & risks between the 2 parties.


As an exporter you need to be ensuring that shipping & delivering responsibilities are wrote down & clearly understood between your customer/s.  A few points to take into consideration when deciding upon the best incoterm for yourself & a customer:

  • Who handles & pay for insurance
  • Who handles customs procedures
  • Who pays any duties & taxes


Incoterms are there to make sure responsibilities such as the delivery, custom procedures & duties are clearly defined & agreed.

Incoterms are updated every 10 years to accommodate the needs & features of the logistics industry.  The last update came in on January 1st 2020, they introduced the new incoterm ‘DPU’ replacing the old incoterm ‘DAT’.  Please see below the current 11 incoterms that will be in place until the end of 2029:


  • EXW- Ex Works
  • FCA- Free Carrier
  • CPT- Carriage Paid To
  • CIP- Carriage & Insurance Paid To
  • DAP- Delivered at Place
  • DPU- Delivered at Place Unloaded
  • DDP- Delivered Duty Paid
  • FAS- Free Alongside Ship
  • FOB- Free On Board
  • CFR- Cost & Freight
  • CIF- Cost Insurance & Freight

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