GlossaryCustoms and trade
Incoterms
Standard trade terms published by the International Chamber of Commerce that define who pays for and bears the risk of each step of a shipment.
Incoterms (International Commercial Terms) are a set of three-letter rules published by the International Chamber of Commerce (ICC). Each rule spells out which party, buyer or seller, pays for transport, insurance, export and import clearance, and at what point risk passes from one to the other.
The current edition is Incoterms 2020, which contains 11 rules such as EXW (Ex Works), FOB (Free on Board), CIF (Cost, Insurance and Freight), DAP (Delivered at Place) and DDP (Delivered Duty Paid). Some rules apply to any mode of transport and some only to sea and inland waterway transport.
Incoterms do not decide who owns the goods or the price; those are set by the sales contract. They are most important in freight and B2B trade, while parcel shipping usually comes down to the choice between DDP and DAP.
Learn more in our Cross-border shipping articles.
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