INCOTERMS (International Commercial Terms) are a set of global trade rules created by the International Chamber of Commerce (ICC).
They tell buyers and sellers exactly:

• Who arranges transport 🚚🚢✈️

• Who pays costs 💰

• Who takes responsibility for risks 📦⚠️

• When the risk passes from seller to buyer

Think of them as the rules of the game for international shipping.

🔑 Key Points

• INCOTERMS are always written as 3 letters (e.g., FOB, CIF, DAP).

• They don’t cover payment (that’s a separate contract).

• They only explain delivery, transport, insurance, and risk transfer.

📋 The Most Common INCOTERMS (Simplified)

1. EXW (Ex Works)

• Seller: Makes goods available at their place (factory/warehouse).

• Buyer: Does everything else (loading, shipping, insurance, customs).
  👉 Cheapest for seller, hardest for buyer.

2. FOB (Free On Board)

• Seller: Delivers goods onto the ship at the port.

• Buyer: Pays for shipping, insurance, and risk from that point.
  👉 Common for sea freight.

3. CIF (Cost, Insurance & Freight)

• Seller: Pays for shipping + insurance to buyer’s port.

• Buyer: Handles customs & inland delivery after port.
  👉 Safer for buyer than FOB.

4. DAP (Delivered At Place)

• Seller: Delivers goods to the buyer’s country, at an agreed location (not cleared for import).

• Buyer: Handles import duties/customs.
  👉 Convenient for buyer.

5. DDP (Delivered Duty Paid)

• Seller: Handles everything — shipping, customs, duties, taxes, delivery.

• Buyer: Just receives the goods.
  👉 Easiest for buyer, riskiest/most expensive for seller.

🚦 How to Remember

• E-Terms (EXW): Seller does almost nothing.

• F-Terms (FOB, FCA, etc.): Seller delivers to a carrier, buyer pays main transport.

• C-Terms (CIF, CFR, CPT, CIP): Seller pays main transport, but buyer takes risk after shipment.

• D-Terms (DAP, DDP, DPU): Seller delivers to buyer’s country.

✅ Simple example:
If you buy medical equipment from China:

• EXW: You pick it up at their factory.

• FOB: They load it on the ship in China, you handle everything after.

• CIF: They pay shipping + insurance to your local port, then it’s on you.

• DDP: They bring it all the way to your warehouse in your city, customs cleared.