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Incoterms – International Commerce & Shipping Jargon

Whether you are sourcing through Alibaba or importing products from any other country, As a seller, one needs to have good understanding of terms and jargon used in international trade. Incoterms, which is short for “international commercial terms,” are used to make international trade easier by helping traders who are in different countries to understand one another. Incoterms were first developed in 1936 and are updated from time to time to conform to current trade practices. Incoterms are trade terms published by the International Chamber of Commerce (ICC) and right now Incoterms 2010 are in effect.

The terms mostly used by small to medium sized sellers of Amazon & eBay are EXW, FOB & DAP. Nonetheless, details of all the terms are as follows:

1. EXW ( Ex-Works )

Seller will only manufacture the product and hand them over to buyer at seller’s factory / warehouse. From there on all the responsibility of goods transportation lies with buyer.

2. FCA ( Free Carrier )

Seller manufactures the product and is also responsible for delivering the product to a warehouse or place nominated by the buyer within seller’s country.

3. FAS ( Free Alongside Ship ) [For SEA FREIGHT]

Seller is responsible for placing the goods along side a ship at already agreed upon port within seller’s country.

4. FOB ( Free On Board ) [For SEA FREIGHT]

“Free On Board” means that the seller delivers the goods on board the vessel/ship at the port of shipment within seller’s country which is already agreed upon earlier. After getting the shipment loaded, the responsibility transfers over to buyer.

5. CFR ( Cost and Freight ) [For SEA FREIGHT]

“Cost and Freight” means that the seller is also responsible for freight charges till the goods arrived at the port of buyer’s country, however risk is transferred to buyer once shipment is loaded onto the ship.

6. CIF ( Cost, Insurance and Freight ) [For Sea Freight]

Like CFR however additionally insurance is also included but still risk is transferred to buyer as soon as the shipment is on board.

7. CPT ( Carriage Paid To )

Seller is responsible for delivering the goods to the buyer warehouse/destination within the buyer’s country. Insurance is not included

8. CIP ( Carriage And Insurance Paid To )

“Carriage and Insurance Paid to” is similar to CPT but now insurance is also included and is responsibility of seller.

9. DAT ( Delivered At Terminal )

Seller is reponsible till goods are delivered to the terminal at sea/air port within buyer’s country. Custom clearance is responsibility of buyer.

10. DAP ( Delivered At Place )

Seller delivers at the place/warehouse within buyer’s country but custom duty is paid by the buyer.

11. DDP Delivered Duty Paid

Seller delivers the shipment at buyer’s warehouse with all duties already paid. Buyer is only responsible for unloading the shipment and storing it within his warehouse.


The terms are defined in very easy language for the understanding of first time sellers, starting off with selling on eBay or Amazon. For detailed definition as well as explanation of various fees involved visit International Chamber of Commerce

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