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400-076-6558智领未来，外贸超级营销员
400-076-6558智领未来，外贸超级营销员
Navigating international trade can be complex, especially for newcomers. One of the foundational elements to master is trade terms, officially known as Incoterms® 2020, which define the responsibilities, risk transfers, and cost divisions between buyers and sellers during shipments. This guide decodes all 11 standardized terms to empower you to make confident procurement decisions and build trust with your partners worldwide.
Published by the International Chamber of Commerce (ICC), Incoterms® provide clarity on critical points in the international delivery process. They are divided into four groups based on responsibility and risk allocation:
EXW (Ex Works) – Seller simply makes the goods available at their factory or warehouse. The buyer assumes all transportation, customs clearance, and insurance responsibilities.
Use case: When the buyer has robust logistics & clearance resources or purchases locally, EXW minimizes seller commitment.
FCA (Free Carrier) - Seller delivers goods, cleared for export, to the buyer's nominated carrier at an agreed point. Risk transfers once the goods are handed over.
FAS (Free Alongside Ship) - Seller places goods alongside the vessel at the port. Buyer handles loading, ocean freight & insurance. Suitable for sea or inland waterways only.
FOB (Free On Board) - Seller loads goods onto the vessel nominated by the buyer. Risk passes when goods cross the ship’s rail. One of the most popular Incoterms for sea transport.
CFR (Cost and Freight) – Seller pays transport to destination port and clears export. Risk transfers once goods are loaded onboard.
CIF (Cost, Insurance and Freight) – Builds on CFR by adding minimum cargo insurance paid by seller. Widely used in sea transport.
CPT (Carriage Paid To) – Seller pays transport to named destination, risk passes at first carrier. Suitable for multiple transport modes.
CIP (Carriage and Insurance Paid To) – Includes insurance (often comprehensive “all risks”) along with transport paid to destination, enhancing seller's responsibility.
DPU (Delivered at Place Unloaded) – Seller delivers and unloads at destination. Risk passes post unloading. Suitable for deliveries involving diverse transport modes with designated unloading.
DAP (Delivered at Place) – Seller delivers ready for unloading at destination, but unloading and import clearance are buyer’s responsibility.
DDP (Delivered Duty Paid) – Complete seller responsibility including import duties and clearance. Ideal when buyers lack customs expertise or prefer zero hassle.
Trade terms heavily influence costs and risk allocation. For instance, under FOB, sellers quote prices excluding ocean freight and insurance, transferring risk once goods are onboard. Conversely, CIF prices include freight and insurance to port, which can simplify buyer budgeting but may include marked-up insurance rates.
Transport mode compatibility is crucial: terms like FAS and FOB relate strictly to sea/inland waterway shipments, whereas CPT and CIP accommodate air, rail, road, and multimodal transport.
| Term | Seller’s Responsibility | Buyer’s Responsibility | Risk Transfer Point | Applicable Transport |
|---|---|---|---|---|
| EXW | Make goods available at premises | All transport, clearance, insurance | Pickup at seller’s site | Any |
| FCA | Deliver to carrier, export customs | Main transport, insurance | Delivery to carrier | Any |
| FAS | Deliver alongside ship, export customs | Loading, freight, insurance | Alongside ship | Sea/Inland Waterways |
| FOB | Load on ship, export customs | Freight, insurance, unloading | Onboard ship | Sea/Inland Waterways |
| CFR | Freight to destination, export customs | Insurance, unloading, import | Onboard ship | Sea/Inland Waterways |
| CIF | Freight + minimum insurance to dest. | Unloading, import | Onboard ship | Sea/Inland Waterways |
| CPT | Freight to destination, export customs | Insurance, import costs | Hand over to 1st carrier | Any |
| CIP | Freight + insurance to destination | Import costs | Hand over to 1st carrier | Any |
| DPU | Transport + unloading at destination | Import clearance | Unload at destination | Any |
| DAP | Transport to destination | Unloading + import clearance | Goods ready for unloading | Any |
| DDP | Delivery + all duties paid | Receipt of goods | At destination point | Any |
Mastering Incoterms® helps avoid costly misunderstandings and smooths procurement operations. Selecting terms matching your logistics capacity and risk appetite ensures transparency and strengthens seller-buyer trust. Particularly for new buyers, terms like CIF and DDP can simplify import procedures and reduce operational risks.
Equip yourself with an explicit understanding of these trade terms to negotiate effectively, mitigate risks and optimize costs — crucial steps in today’s competitive international markets.
Follow AB Client 【International Trade Academy】 to master trade terms and unlock unparalleled opportunities for your business growth. Don’t miss out – start learning today!
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