In every international trade transaction, one essential element defines who pays, who risks, and who is responsible at each stage: INCOTERMS.
At the Commodity Trading Club, we believe that mastery of trade mechanics is key to avoiding costly disputes, ensuring smooth delivery, and protecting margins.
🔍 Here’s a strategic overview of the 11 Incoterms—broken down clearly by obligation, risk transfer, and mode of transport:
🚛 EXW (Ex Works):
The minimum obligation for the seller. Buyer is responsible from the seller’s gate onward.
🚚 FCA (Free Carrier):
Seller delivers goods to a specified location or first carrier; risk passes there.
🚚 CPT (Carriage Paid To):
Seller pays for transportation up to destination, but risk transfers at origin.
🚚 CIP (Carriage & Insurance Paid To):
Like CPT, but includes insurance up to the named destination.
📦 DAP (Delivered at Place):
Seller bears all costs and risks until goods are made available at the destination. Buyer unloads.
📦 DPU (Delivered at Place Unloaded):
The only Incoterm where the seller is responsible for unloading at destination.
📦 DDP (Delivered Duty Paid):
Maximum seller obligation – includes duties, taxes, and delivery to the buyer.
⚓ FAS (Free Alongside Ship):
Seller delivers goods next to the vessel; buyer loads and handles main transport.
⚓ FOB (Free On Board): (Not shown in image but important)
Seller delivers goods on board the vessel; risk passes at loading.
🚢 CFR (Cost and Freight):
Seller pays for main transport but risk transfers at port of origin.
🚢 CIF (Cost, Insurance and Freight):
Same as CFR, but includes insurance to destination port.
💼 Whether you’re handling bulk oil cargoes, agri-commodities, base metals, or industrial materials, the choice of Incoterm affects contracts, pricing, liability, insurance, customs clearance, and ultimately profitability.
AnalystGuru - Everything Analysis 