Incoterms in import and export

International trade involves numerous risks and responsibilities for both exporters and importers. To prevent disputes and create a standardized framework, incoterms used in international trade have been established by the International Chamber of Commerce (ICC). These terms define the responsibilities of buyers and sellers in the delivery process, including costs, risks, and obligations.

What is the Meaning of Incoterms in Export?

The incoterms meaning refers to the standardized international commercial terms that dictate the terms of trade for the sale of goods. Incoterms in export establish a common understanding between parties, specifying the obligations of sellers and buyers in cross-border transactions. These terms do not regulate payment methods but clarify cost-sharing, risk transition, and delivery points. International incoterms are essential for smooth logistics operations in global trade.

Classification of Incoterms

Incoterms types are categorized based on the mode of transport. These classifications help businesses select the most suitable trade terms according to their needs. The primary classification of incoterms for export includes terms applicable to all transport modes and those specific to sea and inland waterway transport.

Delivery Methods Used for All Transport Types

EXW - Ex Works: All costs and risks are borne by the importer. The delivery of the goods is made to a point determined by the exporter.

FCA - Free Carrier: In this type of trade, export formalities and domestic shipping costs up to the specified location belong to the seller. The buyer is responsible for shipping after the designated location and import formalities in the receiving country.

CPT - Carriage Paid To: It means that the seller pays the freight for the goods to be transported to the agreed destination. When an unexpected situation happens to the goods, the buyer pays the damage because the goods are in the custody of the carrier.

CIP - Carriage and Insurance Paid To: Delivery with transportation cost and insurance paid. In addition to the CPT, the exporter is obliged to take out transport insurance.

DAP - Delivered at Place: It means delivery at the designated place. The product is delivered in the importer's country and to the designated address, with all costs paid, except taxes.

DPU - Delivered At Place Unloaded: It is the delivery of the goods to the buyer after the unloading costs are paid by the seller at the terminal point determined by the buyer and the seller.

DDP - Delivered Duty Paid: It means delivery with customs duties paid. Almost all costs are borne by the exporter. All expenses, including customs clearance in the importing country, up to delivery to the importer are covered by the exporter.

Delivery Methods Used in Sea and Inland Waters

FAS - Free Alongside Ship: FAS delivery method is used only for maritime transportation. It is the delivery of the goods at the dock or at the loading area.

FOB - Free on Board: It means delivery to the ship's bar. After the goods are loaded on the ship, responsibilities such as transportation, insurance and cost pass to the importer.

CFR - Cost and Freight: It means delivery with freight paid. In this delivery method, freight is paid by the exporter and all remaining costs are paid by the importer.

CIF - Cost, Insurance and Freight: Costs, freight and insurance paid delivery. It is the delivery of the goods in the importer's country with all costs covered.

 

Changes Made with INCOTERM 2020

With the latest updates in import incoterms, some adjustments were made to enhance clarity and efficiency. DAT - Delivered At Terminal delivery type has been changed to DPU - Delivered At Place Unloaded. DAT does not differ from DPU in terms of content. The seller has the condition that the goods are unloaded from the transport vehicle at the buyer's order without customs clearance.

These internationally recognized delivery methods provide significant convenience in global trade by ensuring transparency and consistency. TradeAtlas, as a global trade intelligence platform, helps businesses navigate and apply incoterms in foreign trade effectively to optimize logistics and reduce risks.

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For detailed information on the subject of transportation methods used in Turkey's foreign trade, you can review the content “Transportation Methods Used in Turkey's Foreign Trade”.