Encyclopedia-13 International Trade Terms

Here is a clearer, structured understanding of the 13 international trade terms (Incoterms-style).

Group 1: Minimal seller responsibility

• EXW (Ex Works)
  Seller only makes goods available at their premises. Buyer handles everything else (transport, export, risk from the start).
  Think: “Pick it up yourself.”

Group 2: Main carriage not paid by seller (F-terms)

• FCA (Free Carrier)
  Seller delivers goods to buyer’s carrier and clears export. Risk transfers there.

• FAS (Free Alongside Ship)
  Seller places goods next to ship at port. Buyer loads and ships.

• FOB (Free on Board)
  Seller loads goods onto ship. Risk transfers once on board.

Quick idea: Seller delivers to transport, but buyer pays for main journey.

Group 3: Main carriage paid by seller (C-terms)

Important concept: Seller pays transport, but risk transfers earlier (at shipment point).

• CPT (Carriage Paid To)
  Seller pays transport to destination, but risk transfers when given to carrier.

• CIP (Carriage and Insurance Paid To)
  Same as CPT, plus seller buys insurance.

• CFR (Cost and Freight)
  Sea transport only. Seller pays freight; risk transfers when goods are on ship.

• CIF (Cost, Insurance and Freight)
  Same as CFR, but seller also provides insurance.

Quick idea: Seller pays, but buyer carries risk during transit.

Group 4: Maximum seller responsibility (D-terms)

Seller handles most or all logistics.

• DAP (Delivered at Place)
  Seller delivers to destination, buyer unloads.

• DPU (Delivered at Place Unloaded)
  Seller delivers and unloads.

• DDP (Delivered Duty Paid)
  Seller does everything including duties and taxes. Buyer just receives goods.

Quick idea: Seller handles nearly everything.

Older / less commonly used terms

• DAF (Delivered at Frontier)
  Delivery at border; risk transfers there. Rare in modern Incoterms.

• DEQ (Delivered Ex Quay)
  Delivery at port quay; buyer handles unloading and import. Also largely replaced by newer terms.

One simple example to tie it together

Imagine buying goods from China to Seattle:

• EXW: You pick up at factory and manage everything.

• FOB: Seller loads onto ship in China; you handle ocean shipping onward.

• CIF: Seller pays shipping + insurance to Seattle, but risk is technically yours during transit.

• DDP: Seller delivers to your Seattle address and handles customs, duties, everything.

If you want, I can turn this into a quick cheat sheet or help you memorize it with patterns.