Incoterms® (short for International Commercial Terms) are a globally recognized set of rules that define the responsibilities, costs, and risks of each party in the delivery of goods. These 11 rules are governed by the International Chambers of Commerce (ICC), and provide the guidelines for all parties involved in trade, including importers, exporters, transporters, insurers, and lawyers.
In the context of packaging, Incoterms, or International Commercial Terms, play a significant role in defining the responsibilities of sellers and buyers concerning the delivery of goods under sales contracts. These terms establish guidelines on aspects such as shipping costs, risk management, and the point of delivery, all of which influence packaging requirements. Understanding and adhering to Incoterms is crucial for ensuring that packaging is suitable for the mode of transport, compliant with regulations, and capable of protecting the goods throughout their journey, thereby facilitating smooth international trade and safeguarding the interests of all parties involved.
Incoterms® cover all tasks, responsibilities, and risks relating to an international shipment - specifically the delivery of goods from sellers to buyers. These terms are what the seller and buyer agree upon before shipping, and help prevent any misunderstandings on who will be responsible for what. For example, who's responsible for paying taxes and duties, shipping fees, insurance, etc.
In our platform, we provide door to door shipping options that are either:
If would like a different shipping option based on any of the other Incoterms® below, please get in touch!
EXW - Ex Works (place of delivery)
The buyer is responsible for pick-up and delivery of the goods to the final destination, including all delivery costs, export/imports customs clearance, and paying any import taxes and duties.
FCA - Free Carrier (place of delivery)
The seller is responsible for export clearance and delivery to the carrier at the place of delivery. A carrier is a company who's responsible for transporting the products by air, water, or land.
The buyer is responsible for carriage, import customs clearance, payment of taxes & duties, and delivery to the final destination.
FAS - Free Alongside Ship (port of shipment)
The seller is responsible for export clearance and placing the goods alongside the vessel at the named port of shipment (e.g. loading dock).
The buyer is responsible for loading the goods onto the vessel, carriage, import customs clearance, payment of taxes & duties, and delivery to the final destination.
FOB - Free on Board (port of shipment)
The seller is responsible for export clearance and loading the goods on the vessel at the port of export.
The buyer is responsible for carriage, import customs clearance, payment of taxes & duties, and delivery to the final destination.
CPT - Carriage Paid To (place of destination)
The seller is responsible for delivery to the place of destination but is not responsible for insuring the goods during transit. The risk transfers to the buyer once the goods have been handed over to the first carrier, even if multiple modes of transport (e.g. truck then boat) are used.
For example, if a truck transporting a shipment to the port damages the goods, the seller is not responsible for damages since the goods have already been transferred to the first carrier (the truck). If the buyer requires the seller to insure the products during transit, CIP should be considered instead.
Upon shipment arrival, the buyer is responsible for unloading, customs clearance, payment of taxes & duties, and delivery to the final destination.
CIP - Carriage and Insurance Paid To (place of destination)
Similar to CPT, but the seller is responsible for insurance coverage until the goods have reached the place of destination. The seller must insure goods in transit for 110% of the contract value.
Like CPT, the risk transfers to the buyer once the goods have been handed over to the first carrier, even if multiple modes of transport (e.g. truck then boat) are used. Upon shipment arrival, the buyer is responsible for unloading, customs clearance, payment of taxes & duties, and delivery to the final destination.
CFR – Cost and Freight (port of destination)
The seller is responsible for delivery to the port of destination but is not responsible for insuring the goods during transit. The risk transfers once the goods have been loaded onto the vessel in the country of export.
Upon shipment arrival, the buyer is responsible for unloading, customs clearance, payment of taxes & duties, and delivery to the final destination.
If the buyer requires the seller to insure the products during transit, CIF should be considered instead.
CIF - Cost, Insurance & Freight (port of destination)
Similar to CIF, but the seller is responsible for insurance coverage until the goods have reached the port of destination. The seller must insure goods in transit for 110% of the contract value.
Like CFR, the risk transfers to the buyer once the goods have been loaded onto the vessel in the country of export. Upon shipment arrival, the buyer is responsible for unloading, customs clearance, payment of taxes & duties, and delivery to the final destination.
DPU – Delivered At Place Unloaded (place of destination)
The seller is responsible for delivering and unloading the goods at the place of destination, which can be at a terminal, warehouse, or any location. The seller covers all costs associated with delivery and unloading, and bears all risk until the goods have been unloaded.
Upon unloading, the buyer is responsible for any onward carriage costs (e.g. from terminal to final destination, if any), customs clearance and payment of taxes & duties.
DAP – Delivered At Place (place of destination)
The seller is responsible for delivering the goods to the place of destination, ready for unloading. The seller covers all costs up to this point, including export fees, carriage fees, and terminal fees. The risk is transferred to the buyer when the goods are ready to be unloaded.
The buyer is responsible for unloading, customs clearance, payment of taxes & duties, and delivery to the final destination.
DDP – Delivered Duty Paid (place of destination)
The seller is responsible for delivery to the place of destination, clearing customs, and settling any import taxes & duties. The seller bears all risk and responsibility until the goods have been delivered at the place of destination.