Incoterms

Selecting the right incoterm doesn’t only ascertain who pays for which part of the transit; there are also customs risks to consider. Find out about international commercial terms in this article.

Customs Support strongly advises importers and exporters in both the European Union and the United Kingdom not to use the incoterm Delivery Duty Paid when trading between the European Union and the United Kingdom. 

When goods are bought or sold "Ex Works" (EXW) it means that the Seller is making the goods available at their factory or warehouse. The buyer is then free to come and pick up the goods. Ex Works places full responsibility for cost and risk with the buyer, as the buyer has to arrange everything.

Since January the Incoterms 2020 are in effect. Every ten years these Incoterms are updated. You can read more about the most important changes compared to Incoterms 2010 in one of our earlier blogs in the Incoterms series. The Incoterm in this blog is one of the Incoterms specifically for transport over water: Cost and Freight (CFR).

When goods are bought or sold “Free on Board” (FOB) it means that the seller delivers the goods to a ship at a port previously agreed to by the seller and the buyer. The seller loads the goods onto the ship. The buyer then takes care of the import formalities and transportation to the final destination. Free on Board is one of the oldest Incoterms. It dates back to when goods were carried by sailing ships and it was one of the terms when the Incoterms were first released in 1936. It is also one of the most used commercial terms.

Since January 2020 the Incoterms 2020 are in effect. Every ten years these Incoterms are updated.

When goods are bought or sold “Delivery Duty Paid” (DDP) it means that the Seller delivers the goods to a place previously agreed to by the seller and the buyer. This can be any location. The agreed place of delivery (e.g. the terminal) needs to be specifically named.

In 2019 a new version of the Incoterms was released. Companies are now advised to use Incoterms 2020.

When goods are bought or sold “Delivery at Terminal” (DAT) it means that the Seller delivers the goods to a terminal at destination previously agreed to by the seller and the buyer. This can also be a road transportation hub or a quay.

When goods are bought or sold “Carriage and Insurance Paid” (CIP) it means that the Seller delivers the goods to a destination previously agreed to by the seller and the buyer.