WEBVTT - What are Incoterms?

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Incoterms are internationally recognised 3-letter terms

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 applied to export goods.

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They make it clear what a buyer and seller’s responsibilities are.

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It’s really important to get familiar with them

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so you’re clear about what you’re signing up for.

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They cover elements of a contract such as where the goods will be delivered

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who will arrange transport, or who will handle and pay for insurance.

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There are 11 incoterms in total.

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7 cover all forms of transport

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and 4 are for ocean freight.

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So let’s look at some commonly used ones.

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Ex Works (EXW) 

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This applies to all forms of transport

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and basically means the buyer arranges and pays for it.

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Delivered at Place Unloaded (DPU)

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This applies to all forms of transport and means that the seller will arrange 

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the shipment and delivery of goods to the buyer

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including how the goods are unloaded.

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But the customs clearance will be completed by the buyer.

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Finally, let’s look at cost and freight (CFR)  

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This applies to ocean freight and means the seller will have to pay the costs

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and freight to bring the goods to the overseas destination.

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The buyer will then pay the onward costs and associated risk from there. 

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There are pros and cons to each incoterm

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including pros like being in control of the transport process

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to ensure a high level of care is taken.</font>

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to cons, like having to deal with customs checks and paperwork.

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And there are 

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costs and risks associated with each one.