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Exporting Basics Appendix

INDEX CHAPTER
APPENDIX: INCOTERMS

INCOTERMS are international terms of sale developed by the International Chamber of Commerce. These shorthand terms are used in foreign trade contracts to define which parties incur costs and when. The most frequently used INCOTERMS are listed below. For a complete list of INCOTERMS, including responsibilities of the parties, see Incoterms 2000.

EXW (ex works) at a named point of origin (e.g., ex factory, ex mill, ex warehouse). Under this term, the price quoted applies only at the point of origin and the seller agrees to place the goods at the disposal of the buyer at the specified place on the date or within the period fixed. All other charges are for the account of the buyer.

FAS (free alongside ship) at a named port of export. This includes the price for the goods, plus charges to deliver the goods from the factory to alongside the vessel at the exit port. The seller handles the cost of unloading and wharfage. The buyer covers the cost to load the goods on the vessel and all the insurance and transportation costs to the destination port.

FOB (free on board) at a named port of export. This includes the FAS cost, plus the cost to load the goods on the vessel. The buyer pays for insurance and transportation to the foreign port.

CFR (cost and freight) to a named overseas port of import. Under this term, the seller quotes a price for the goods that includes the cost of transportation to the named point of debarkation. The cost of insurance is left to the buyer's account. (Typically used for ocean shipments only.)

CIF (cost, insurance, freight) to a named overseas port of import. This includes the FOB cost, plus all insurance and transportation to costs to the foreign port.

FCA (free carrier) to a named place. This term replaces the former 'FOB named inland port" to designate the seller's responsibility for the cost of loading goods at the named shipping point. It may be used for multimodal transport, container stations, and any mode of transport, including air.

CPT (carriage paid to) and CIP (carriage and insurance paid to) a named place of destination. Used in place of CFR and CIF, respectively, for shipment by modes other than water.

INDEX CHAPTER

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