Incoterms
Incoterms are a set of three-letter trade terms developed by the International Chamber of Commerce (ICC) that are commonly used in international commercial transactions. Incoterms clarify which party is responsible for paying for freight and insurance, and whether the goods are delivered to the buyer or the seller.
The most commonly used Incoterms are:
EXW (Ex Works): The seller delivers the goods to their own premises or designated location, and the buyer is responsible for collecting them and paying for all transportation and insurance costs.
FCA (Free Carrier): The seller delivers the goods to a carrier or another party nominated by the buyer, and the buyer is responsible for paying all transportation and insurance costs.
FAS (Free Alongside Ship): The seller delivers the goods next to the vessel at agreed upon port of loading, and the buyer is responsible for paying all transportation and insurance costs.
FFP (Free on First Provided Vessel): A specific vessel is nominated by name in advance by either party, but if it becomes unavailable, then any other vessel may be used at that time so long as it’s similar. The transaction continues on this basis until delivery occurs, at which point responsibility and cost moves to the buyer.