What Are Incoterms?

To facilitate commerce around the world, the International Chamber of Commerce (ICC) publishes a set of Incoterms, officially known as international commercial terms. Globally recognized, Incoterms prevent confusion in foreign trade contracts by clarifying the obligations of buyers and sellers. Parties involved in domestic and international trade commonly use them as a kind of shorthand to help understand one another and the exact terms of their business arrangements. Some Incoterms apply to any means of transportation; others apply strictly to transportation across water.


In 2010, the two main categories of Incoterms were updated and classified by modes of transport. The first classification applies to any mode of transport, while the second classification only applies to sea and inland waterway transport.

Group 1 Incoterms: Apply to Any Mode of Transport

  • EXW Ex Works
  • FCA Free Carrier
  • CPT Carriage Paid To
  • CIP Carriage and Insurance Paid To
  • DAT Delivered at Terminal
  • DAP Delivered at Place
  • DDP Delivered Duty Paid

Group 2 Incoterms: Apply to Sea and Inland Waterway Transport

  • FAS Free Alongside Ship
  • FOB Free on Board
  • CFR Cost and Freight
  • CIF Cost, Insurance, and Freight

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