Incoterms provide a common set of rules to clarify  who is responsible for what and when under sales contracts. Incoterms significantly reduce misunderstandings among seller and buyer. Below is a list of the more common terms.  This list is meant to give you an idea of what each term means.  However, since Incoterms define liability, you should check with the author of whatever document references an Incoterm prior to confirm you fully understand their definition of the term.


Ex Works (EXW)
The buyer or consignee handles everything.  This includes pickup from the Seller (Shipper), export customs, ocean (or air) transport, import customs, and delivery.

Delivered at Place (DAP)
Seller (Shipper) is responsible for arranging carriage and delivery to a specifically named place.  Buyer (Consignee) is responsible for Import Customs clearance, as well as any duties or taxes.  This term often replaces the term Delivered Duties Unpaid (DDU).

Delivered Duty Paid (DDP)
This requires the greatest burden on the Seller (Shipper).  They must arrange all transportation as well as the Import Customs clearance and payment of duties and taxes.

Free Alongside Ship (FAS)
As the name indicates, this is for water-transportation only.  The Seller (Shipper) delivers the cleared-for-export cargo to the vessel.  The Buyer (Consignee) is responsible for loading the cargo onto the vessel.

Free on Board (FOB)
The only difference from FAS is that the Seller (Shipper) is responsible for loading the cargo into the vessel.

Cost & Freight (CFR)
This is one of the few terms where payment and responsibility do not line up.  Here the Seller (Shipper) pays for the transport to a named port (similar to DAP); however, the responsibility actually transfers once the goods were loaded on board.  That means, if there is a loss at sea, the responsibility is for the Buyer (Consignee).

Cost, Insurance & Freight (CIF)
This is the same as CFR except the Seller (Shipper) insures the cargo to the same point that they paid for shipping to.