The essentials every buyer, manufacturer and logistics partner should know — the rules, terms and documents that move goods across borders.
Incoterms are the International Chamber of Commerce’s standard trade terms. They set where the seller’s job ends and the buyer’s begins. Always write the term and a named place — e.g. “FOB Tangier Med, Incoterms 2020”.
| Term | Name | Seller delivers… | Risk passes to buyer | Mode |
|---|---|---|---|---|
| EXW | Ex Works | Goods ready at its own premises. Buyer does everything else, even export clearance | At seller’s premises | Any |
| FCA | Free Carrier | Export-cleared goods to the buyer’s carrier at a named place | On handover to the carrier | Any |
| CPT | Carriage Paid To | To the carrier; seller pays freight to destination | On handover to the first carrier | Any |
| CIP | Carriage & Insurance Paid To | As CPT, plus seller insures (high cover) | On handover to the first carrier | Any |
| DAP | Delivered at Place | To the named destination, ready to unload | At destination | Any |
| DPU | Delivered at Place Unloaded | To the named destination, unloaded | At destination, after unloading | Any |
| DDP | Delivered Duty Paid | To destination, import-cleared, duties paid | At destination | Any |
| FAS | Free Alongside Ship | Alongside the vessel at the port of loading | Alongside the ship | Sea |
| FOB | Free on Board | Loaded on board at the port of loading | Once on board | Sea |
| CFR | Cost & Freight | On board; seller pays freight to destination port | Once on board | Sea |
| CIF | Cost, Insurance & Freight | As CFR, plus seller insures (minimum cover) | Once on board | Sea |
Tip: FOB, CFR and CIF are for sea freight in bulk or break-bulk. For containers, the ICC recommends FCA, CPT or CIP.
| Method | How it works | Suits |
|---|---|---|
| Advance payment | Buyer pays before production or shipment | New relationships, custom orders |
| Deposit + balance | Part up front, balance against documents or before release | Repeat programmes |
| Documentary collection | Banks exchange shipping documents for payment or acceptance | Established trade, lower cost than LCs |
| Letter of credit | Buyer’s bank guarantees payment against compliant documents | Large or higher-risk trades |
| Open account | Goods first, payment on agreed days (e.g. 30 days) | Trusted, credit-checked buyers |
Security: legitimate suppliers never change bank details by email. Always confirm by phone with a known contact before paying.
This guide is general information, not legal or tax advice. Rules change and vary by country — check before you ship.