Incoterm for International Trade

kelolalaut.com Incoterm (International Commercial Terms) is a set of standardized terms published by the International Chamber of Commerce (ICC) used in international trade. These terms are designed to provide clear guidelines regarding the responsibilities of buyers and sellers in the transportation of goods, including the division of costs, risks, and responsibilities for documentation throughout the shipping process.
Purpose and Function of Incoterm
1.    Reducing Misunderstandings
Incoterm helps prevent differences in interpretation between parties in an international trade contract.
2.    Regulating Risk Distribution
Incoterm specifies where the risk transfers from the seller to the buyer.
3.    Determining Cost Responsibilities
These terms also establish who is responsible for specific costs, such as transportation, customs duties, and insurance.
Categories of Incoterm
Incoterm is divided into two main categories based on the mode of transportation used:
1.    Incoterms for All Modes of Transportation
o    EXW (Ex Works): The seller is responsible only until the goods are made available at the seller's location.
o    FCA (Free Carrier): The seller delivers the goods to a carrier chosen by the buyer.
o    CPT (Carriage Paid To): The seller pays for transportation to a specified destination.
o    CIP (Carriage and Insurance Paid To): Similar to CPT, but the seller also provides insurance.
o    DAP (Delivered at Place): The seller is responsible until the goods arrive at the destination.
o    DPU (Delivered at Place Unloaded): The seller handles delivery until the goods are unloaded at the destination.
o    DDP (Delivered Duty Paid): The seller covers all costs, including import duties in the buyer’s country.
2.    Incoterms for Sea and Inland Waterway Transport
o    FAS (Free Alongside Ship): The seller delivers the goods alongside the ship.
o    FOB (Free on Board): The seller is responsible until the goods are loaded onto the ship.
o    CFR (Cost and Freight): The seller pays for transportation to the destination port.
o    CIF (Cost, Insurance, and Freight): Similar to CFR, with added insurance coverage.
Latest Version: Incoterms 2020
The latest version of Incoterms, released in 2020, updated several terms to reflect modern trade needs. For example, the term DPU replaced the previous term DAT (Delivered at Terminal).

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