Understanding Incoterms in Simple short words

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The 11 Incoterms (Incoterms® 2020)

Incoterms are divided into two main categories:

A. Rules for Any Mode of Transport

1. EXW – Ex Works
   Seller makes goods available at their premises. Buyer bears almost all costs and risks.

2. FCA – Free Carrier
   Seller delivers goods to a carrier nominated by the buyer. Widely used in container trade.

3. CPT – Carriage Paid To
   Seller pays transport costs, but risk transfers once goods are handed to the carrier.

4. CIP – Carriage and Insurance Paid To
   Similar to CPT, but seller must provide insurance.

5. DAP – Delivered At Place
   Seller delivers goods to a named destination, excluding import clearance and duties.

6. DPU – Delivered at Place Unloaded
   Seller delivers and unloads goods at the destination (new in Incoterms 2020).

7. DDP – Delivered Duty Paid
   Seller bears all costs and risks, including import duty and taxes.

B. Rules for Sea and Inland Waterway Transport Only

8. FAS – Free Alongside Ship
   Seller places goods alongside the vessel at the port of shipment.

9. FOB – Free On Board
   Seller loads goods onto the vessel; risk transfers once on board.

10. CFR – Cost and Freight
    Seller pays ocean freight, but risk transfers at the port of shipment.

11. CIF – Cost, Insurance, and Freight
    Seller pays freight and minimum insurance; commonly used in bulk and commodity trades.