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Incoterms, short for “International Commercial Terms”, are a set of rules. They define the responsibilities of sellers and buyers in international trade. These rules are about shipping, risk, and cost.

Incoterms were first made in 1936 by the International Chamber of Commerce (ICC). They update them to keep up with changes in global trade.

In relation to freight forwarding, Incoterms guide freight forwarders in determining who assumes various shipping responsibilities and costs.

Common Incoterms

Incoterms are key in global trade. They make sure buyers and sellers understand their duties. This reduces misunderstandings and disputes:

  1. EXW (Ex Works): The seller makes the goods available at their place. The buyer covers all transport costs.
  2. FOB (Free On Board): The seller loads the goods on a ship chosen by the buyer. The risk passes to the buyer once the goods are on the ship.
  3. CIF (Cost, Insurance, and Freight): The seller pays for shipping to the destination port. They also pay for insurance. The risk passes to the buyer when the goods are on the ship.
  4. DDP (Delivered Duty Paid): The seller pays for all transport costs, duties, and taxes. They deliver the goods to a place agreed upon.
  5. DAP (Delivery Duty Paid): The seller takes on all the responsibilities and costs. The seller does everything from shipping the product to paying customs duties.

More Fulfilment Terms

Last mile delivery describes the final leg of a product's delivery process from the supplier to the consumer.
Third-Party Logistics (3PL) allows businesses to outsource logistics operations including warehousing, shipping, and inventory management.

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