What are Incoterms?
Incoterms rules are international trade terms that buyers and sellers use to define responsibilities for tasks, costs, and risks during the sales and shipment of goods Internationally. These rules are widely accepted by governments and legal authorities, helping to facilitate international trade and making them
an integral part of global trade contracts.

Incoterms rules help clarify when the seller’s costs and risks transfer to the buyer. They provide structure for smooth trade agreements and shipment processes. Some rules are specific to certain modes of transport, while others are designed for any mode of transportation. Understanding these differences is essential for avoiding confusion in international transactions.

Incoterms Rules for Any Mode of Transport (7 Terms):

1. EXW – Ex Works
2. FCA – Free Carrier
3. CPT – Carriage Paid To
4. CIP – Carriage and Paid To
5. DAP – Delivered at Place
6. DPU – Delivered at Place Unloaded (replaces DAT)
7. DDP – Delivered Duty Paid
Incoterms for Sea and Inland Waterway Transport Only (4 Terms):
1. FAS – Free Alongside Ship
2. FOB – Free on Board
3. CFR – Cost and Freight
4. CIF – Cost, Insurance, and Freight

What are the most used Incoterms in 2025?
Here are the most commonly used Incoterms: EXW, FCA, FOB, CIF, and DDP. These terms are favored due
to their clear guidelines and suitability for different modes of transport and shipping scenarios.
EXW – Ex Works
Why it’s used: EXW is popular because it places minimal responsibility on the seller. The buyer is
responsible for all costs and risks from the seller’s premises onward. This term is straightforward for
sellers, making it a common choice for initial stages of shipping.
FCA – Free Carrier
Why it’s used: FCA is a versatile Incoterm used for a wide range of transport modes, including sea, air,
road, and rail. It is particularly suitable for containerized goods, where the seller delivers the goods to a
specified location. FCA also allows for the goods to be placed alongside a vessel at the port, ready for
loading, offering flexibility for various shipping scenarios.
FOB – Free On Board
Why it’s used: FOB is widely used in sea freight shipping. The seller is responsible for the goods until they
are loaded on board the vessel, after which the risk transfers to the buyer. This provides a clear point of
transition and is particularly useful for bulk shipments.
CIF – Cost, Insurance and Freight
Why it’s used: CIF is favored in sea freight as it includes the cost of the goods, insurance, and seafreight
to the named port of destination. The seller takes on the responsibility for the costs and risks until the
goods reach the destination port, providing buyers with some risk mitigation during transit.
DDP – Delivered Duty Paid
Why it’s used: DDP is popular because it places maximum responsibility on the seller, who covers all
shipping costs, risks, customs clearance, import duties & taxes in the country of destination. This term is
convenient for buyers who prefer a hassle-free delivery process, as the seller manages all logistics and
associated costs.