Glossary of Terms and Abbreviations (Incoterms 2000)

INCOTERMS are a set of uniform rules codifying the interpretation of trade terms defining the rights and obligations of both buyer and seller in an international transaction, thereby enabling an otherwise complex basis for a sale contract to be accomplished in three letters.

INCOTERMS are designed to arrange for the transfer of responsibility from seller to buyer at a convenient place where goods can be inspected. Hence FOB, CFR (C&F) and CIF arrange for this to occur upon loading on board the vessel. With container, inspection at shipside is not possible, so that FOB, CFR etc. are inappropriate. The International Chamber of Commerce (ICC) have, accordingly drafted three Combined Transport equivalents, which they advise to use when availing of Combined Transport services in order to avoid disputes. They are FCA, CPT AND CIP which transfer responsibility from seller to buyer at the inland point at which the carrier takes charge of the goods.

Click on any of the 13 terms listed below and read a concise definition from the Preambles to Incoterms 2000. Several of the Preambles, marked below with an *, include a footnote referring to the Introduction. Click anywhere on those pages to view the relevant part of the Introduction. Please note that the terms will appear on your screen in read-only format and so cannot be copied or printed.

EXW EX WORKS (…named place)*

FCA FREE CARRIER (…named place)

FAS FREE ALONGSIDE SHIP (…named port of shipment)*

FOB FREE ON BOARD (…named port of shipment)

CFR COST AND FREIGHT (…named port of destination)

CIF COST, INSURANCE AND FREIGHT (…named port of destination)*

CPT CARRIAGE PAID TO (…named place of destination)

CIP CARRIAGE AND INSURANCE PAID TO (…named place of destination)*

DAF DELIVERED AT FRONTIER (…named place)*

DES DELIVERED EX SHIP (…named port of destination)

DEQ DELIVERED EX QUAY (…named port of destination)*

DDU DELIVERED DUTY UNPAID (…named place of destination)*

DDP DELIVERED DUTY PAID (…named place of destination)*

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ICC recommends that "Incoterms 2000" be referred to specifically whenever the terms are used, together with a location. For example, the term "Delivered at Frontier" (DAF) should always be accompanied by a reference to an exact place and the frontier to which delivery is to be made.

Here are three examples of correct use of Incoterms:
FCA Kuala Lumpur Incoterms 2000
FOB Liverpool Incoterms 2000
DDU Frankfurt Schmidt GmbH Warehouse 4 Incoterms 2000