What does ‘Incoterms’ mean?

‘Incoterms’ (International Commercial Terms) is a term that defines the terms of international trade (contracts). Incoterms, a set of rules published in 1936, specifies the responsibilities of the parties in the transactions concerning the international purchase and sale of goods. 

Significance and application of Incoterms

Incoterms are recognised and applied worldwide. They are listed in the appropriate order on all commercial invoices, this way reducing the likelihood of incongruities arising between buyers and sellers and, therefore, helping to prevent losses.

Incoterms cover all tasks, risks, costs, and other aspects related to commercial transactions between buyers and sellers.

Most popular Incoterms

Ex-Works (EXW)

  • The buyer assumes responsibility for shipping costs and most of related risks;
  • The seller’s responsibility is to ensure that the goods reach the buyer;
  • Upon delivery of the goods to the seller’s warehouse or other pick-up location, the buyer bears all responsibility (including unloading the goods).

Delivered Duty Paid (DDP)

  • The seller assumes responsibility for most of the shipping costs and related risks;
  • The seller takes care of export and import obligations and preparation of goods for unloading;
  • The buyer is responsible for picking up the goods ready for unloading from the agreed place.

Delivered At Place (DAP)

  • The seller assumes responsibility for the costs and risks of delivering the goods to the agreed place;
  • The buyer is responsible for picking up the goods ready for unloading from the agreed place;
  • Exports and imports are subject to obligations identical to those of Delivered at Terminal (DAT) terms.