Incoterms are the abbreviations that represent shipping terms during international trade created by the International Chamber of Commerce for overseas sales and export operations.

These terms are divided into several groups, and each term has a different meaning from the other. These terms are divided as follows:

Delivery to the workplace (location to be determined) EXW:

In this condition, the exporter is bound by the contract, by delivering the goods to a point within the agreed-upon place, and this point may be, for example (the external yards of the warehouse or factory or inside the importer’s building, etc.), according to the type of goods required and the place of delivery And under this condition, the buyer shall bear the responsibility of the carriers sent by him to his warehouse or factory. In this method of delivery, the importer bears the fees, licenses, taxes, all damages and all expenses associated with receiving the goods from the source location, and this condition constitutes the lowest obligation on the exporter and the highest obligation on the buyer.

Free of charge up to the shipping dock (port of loading to be determined) FAS:

In this condition, the exporter is bound by the contract concluded when he delivers the goods according to the terms of the contract to the berth of the sea loading port next to the ship or the shipping line named in the contract, with customs clearance procedure to make the goods ready for export, and thus the exporter bears licensing fees and taxes in his country, and as He also bears the wages and risks of the loading process from his factory or warehouses to the beginning of the intended journey in the contract, starting from the berth of the loading port agreed upon in the concluded contract. From here, the responsibilities of the importer begin from loading the goods on the ship until it reaches the desired destination, where the importer bears all costs, losses, defects and risks of damage. As for the customs clearance fees for the goods, it is on the exporter.

Free on board (port of loading to be determined) FOB:

During this condition, the exporter’s responsibility for the risk of loss or damage to the goods ends when the goods pass the ship’s edge at the port of loading, and the exporter pays the fees for loading the goods until they enter the ship’s land. From this point, the importer is responsible for the goods and all costs, losses and damages that may occur during the transportation process.

Costs and Shipping Fee (to be determined by the name of the port of destination) CFR:

It is a condition that indicates the exporter’s obligation to be responsible for the risk of loss of cargo until the ship passes the edge of the ship at the port of loading as in the FOB condition. The goods from the ship, and in this condition, the buyer bears the risk of losing goods during the main voyage without being a party to the transport contract with the carrier, since the exporter is responsible for paying the main transport fees to the carrier, and therefore the contract of carriage is agreed upon between the exporter and the carrier. Customs duty is borne by the exporter in this way. CFR clause is used for sea carriage only

Free Transportation (location to be determined) FCA:

In this condition, the exporter fulfills the obligation agreed upon in the contract by delivering the goods to the carrier (to be determined by the buyer) at the place or point specified in the contract, and the goods are ready for export. This clause is used by all modes of transport, such as air transport, rail transport, road transport and various modes of transport.

Costs, Insurance and Shipping Fee (to be determined by the name of the port of destination) FCA:

This requirement is the same as the CFR requirement except that in this case the exporter must purchase and pay the importer insurance for the goods. This method is used for sea transportation only.

The payload is driven to (the access port name is specified) CPT:

The exporter bears the costs of the cargo to the port point mentioned in the contract, but the risks are transferred to the buyer as soon as the goods are delivered to the first carrier, who is chosen by the exporter. Carrier refers to any person who undertakes the obligation to carry goods by rail, land, sea, air, inland waters or various modes of transport within the framework of a contract of carriage.

Carriage and Insurance Paid (Determined by the name of the port of arrival) CIP:

In this condition, the goods are delivered to the transport company chosen by the exporter, and the exporter must also pay the transportation costs to the specified point or destination, and therefore the importer bears the risks and other costs that may arise after the goods are delivered at the specified destination. In this condition, the exporter must also provide insurance against the risk of loss, shortage and damage to the goods during the importer’s journey after receiving the goods, since in this case, the exporter contracts the insurance and pays the insurance fee.

Border Delivery (location to be determined) DAF:

In this condition, the seller delivers the goods to the importer through the means of transport agreed upon within the contract, to the point or place designated before the customs area, the borders of the country of destination, without unloading them from the means of transport, where the goods are clear for export but not for import. The expression (border) is used for any borders, including the borders of the country of export, and therefore it is necessary to specify the relevant borders accurately and clearly. In this clause, the exporter bears all shipping risk of loss or damage until the goods are delivered at the border. 

Quay delivery (port to be determined) DEQ:

This condition means that the exporter satisfies the delivery in accordance with the contract, when he places the goods at the disposal of the importer, not faithful to import, on the quay at the appointed port of destination. And the exporter must bear all fees and expenses resulting from the delivery of the goods to the port concerned in the contract and also from unloading the goods to the berth. In this condition, the importer must clear the goods for import and pay the expenses of all procedures and customs.