INCOTERMS (International Commercial Terms) are a set of three-letter standard trade terms most commonly used in international contracts for the sale of goods. First published in 1936, INCOTERMS provide definitions and rules of interpretation for most common commercial terms in international trade, defining the respective roles of the buyer and seller in the arrangement of transportation and other responsibilities and clarify the ownership of the merchandise. They are used in conjunction with a sales agreement or other method of transacting the sales.
| INCOTERM | Sellers arrange and pay for | Buyers arrange and pay for |
Ex works |
packing (shipment arranged and cost of packing is added to the invoice) |
all transportation and import taxes |
Free on rail (FOR) |
delivery to railway or lorry terminal |
all transportation and import taxes |
Free alongside ship (FAS) |
delivery to quay or alongside ship |
all transport and import taxes |
Free on board (FOB) |
delivery over the ship’s rails |
sea freight, insurance, delivery and import taxes |
Cost and freight (C&F) |
sea freight and all charges to ship |
insurance and delivery in own country (plus import taxes) |
Costs, insurance, and freight (CIF) |
all shipping cost including insurance |
delivery from docks |