Incoterms is an abbreviation for “International Commercial Terms’’ used to reduce confusion between buyers and sellers.
Most common Incoterms used today are:
EXW (Exworks) – when a seller makes a product available at a designated location, and the buyer of the product must cover the transport costs.
FOB (Free on Board) – indicates whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping.
CFR ( Cost and Freight) – in a contract specifying that a sale is a cost and freight, the seller is required to arrange for the carriage of goods by sea to a port of destination and provide the buyer with the documents necessary to obtain them from the carrier.
CIF ( Cost Insurance and Freight) – an expense paid by a seller to cover the costs, insurance, and freight of a buyer’s order while it is in transit. The goods are exported to a port named in the sales contract
DDU (Delivered Duty Unpaid) – the seller is responsible for ensuring goods arrive safely to a destination; the buyer is responsible for import duties.
DDP (Delivered Duty Paid) – indicates that the seller must cover duties, import clearance, and any taxes.