Delivery Terms (Incoterms)
Incoterms are international rules that say who arranges and pays for each stage of a shipment and where the risk passes from seller to buyer. Eleven delivery terms are explained below, with who is responsible for loading, export customs, freight, insurance and import customs.
EXW — Ex Works
The term with the least obligation for the seller. The seller makes the goods available at its own factory or warehouse. All costs and risks, including loading, pass to the buyer from the moment of delivery.
| Loading | Buyer |
|---|---|
| Export customs | Buyer |
| Freight | Buyer |
| Insurance | Buyer |
| Import customs | Buyer |
Risk passes: At premises
FCA — Free Carrier
The seller delivers the goods to the buyer's carrier at the named place and completes export customs clearance. All risks and costs pass to the buyer from the moment of handover to the carrier.
| Loading | Seller |
|---|---|
| Export customs | Seller |
| Freight | Buyer |
| Insurance | Buyer |
| Import customs | Buyer |
Risk passes: At carrier
FAS — Free Alongside Ship
The seller delivers by placing the goods alongside the ship (on the quay or a barge) at the port of loading. All risks and costs pass to the buyer from the moment the goods are placed alongside the ship.
| Loading | Seller |
|---|---|
| Export customs | Seller |
| Freight | Buyer |
| Insurance | Buyer |
| Import customs | Buyer |
Risk passes: Alongside ship
FOB — Free On Board
The most commonly used term in Türkiye. The seller delivers once the goods are loaded on board the ship at the port of loading. From the moment the goods are on board, all risk is with the buyer.
| Loading | Seller |
|---|---|
| Export customs | Seller |
| Freight | Buyer |
| Insurance | Buyer |
| Import customs | Buyer |
Risk passes: On deck
CFR — Cost and Freight
The seller loads the goods on the ship and pays the freight to the port of destination. However, the risk passes to the buyer as soon as the goods are on board. The obligation to arrange insurance lies with the buyer.
| Loading | Seller |
|---|---|
| Export customs | Seller |
| Freight | Seller |
| Insurance | Buyer |
| Import customs | Buyer |
Risk passes: On loading
CIF — Cost, Insurance and Freight
In addition to CFR, the seller must also take out an insurance contract against the risk of damage during the voyage. Although the risk passes to the buyer at loading, the cost of insurance is borne by the seller.
| Loading | Seller |
|---|---|
| Export customs | Seller |
| Freight | Seller |
| Insurance | Seller |
| Import customs | Buyer |
Risk passes: On loading
CPT — Carriage Paid To
The seller hands over the export-cleared goods to the carrier it chooses and pays the transport costs to the place of destination. The risk passes to the buyer at handover to the carrier; insurance is for the buyer.
| Loading | Seller |
|---|---|
| Export customs | Seller |
| Freight | Seller |
| Insurance | Buyer |
| Import customs | Buyer |
Risk passes: At carrier
CIP — Carriage and Insurance Paid To
In addition to CPT, the seller also takes out an insurance contract on the buyer's behalf against the risk of damage during the voyage. The risk passes at handover to the carrier; the cost of insurance is borne by the seller.
| Loading | Seller |
|---|---|
| Export customs | Seller |
| Freight | Seller |
| Insurance | Seller |
| Import customs | Buyer |
Risk passes: At carrier
DAT — Delivered At Terminal
The seller places the goods, unloaded from the arriving means of transport, at the buyer's disposal at the named terminal (quay, warehouse, container yard). All transport and unloading costs are for the seller.
| Loading | Seller |
|---|---|
| Export customs | Seller |
| Freight | Seller |
| Unloading | Seller |
| Import customs | Buyer |
Risk passes: At terminal
DAP — Delivered At Place
The seller places the goods, not unloaded, at the buyer's disposal at the named place of destination. All costs and risks up to the place of destination are for the seller; unloading and import customs are for the buyer.
| Loading | Seller |
|---|---|
| Export customs | Seller |
| Freight | Seller |
| Unloading | Buyer |
| Import customs | Buyer |
Risk passes: On arrival
DDP — Delivered Duty Paid
The term with the most obligation for the seller. The seller delivers the goods import-cleared and ready for the buyer at the named place of destination. The customs costs of both parties are borne by the seller.
| Loading | Seller |
|---|---|
| Export customs | Seller |
| Freight | Seller |
| Insurance | Seller |
| Import customs | Seller |
Risk passes: At door
Frequently asked questions
What is the difference between EXW and DDP?
Under EXW the seller makes the goods available at its own premises and the buyer bears almost all costs and risks. Under DDP the seller delivers to the named place with import clearance done and bears the costs and risks up to that point.
Which Incoterms are only for sea freight?
FAS, FOB, CFR and CIF are for sea and inland waterway transport. The other terms suit any mode of transport.
Does an Incoterm decide who owns the goods?
No. Incoterms cover delivery, costs and risk between seller and buyer. They do not transfer ownership and do not replace the sales contract.