MSZ Georgia - International Logistics Company in Batumi, Tbilisi, China, Georgia

1. What are Incoterms?

International trade rules set by the International Chamber of Commerce (ICC).
Define responsibilities of the seller and buyer in the delivery of goods.
Answer key questions:
- Who pays for what (transport, customs, insurance)?
- When does the risk transfer from seller to buyer?
- Who is responsible for documents?

2. Incoterms 2020 Categories

A. Sea and Inland Waterway Transport Only

FAS – Free Alongside Ship: Seller delivers goods alongside the ship at the port.
FOB – Free On Board: Seller loads goods on the ship; risk transfers to buyer at loading.
CFR – Cost and Freight: Seller pays transport costs; risk transfers at ship loading.
CIF – Cost, Insurance, Freight: Same as CFR, but seller also provides minimum insurance.

B. All Modes of Transport (Road, Rail, Air, Sea)

EXW – Ex Works: Buyer takes responsibility from the seller’s premises.
FCA – Free Carrier: Seller delivers goods to carrier or agreed location.
CPT – Carriage Paid To: Seller pays transport to the destination, risk transfers when goods are handed to the carrier.
CIP – Carriage and Insurance Paid To: Same as CPT, but seller also pays for insurance.
DAP – Delivered at Place: Seller delivers goods to the agreed place in buyer’s country.
DPU – Delivered at Place Unloaded: Same as DAP, but seller unloads goods at destination.
DDP – Delivered Duty Paid: Seller pays all costs, including duties and taxes – maximum responsibility.

3. Key Differences

Term

Transport Mode

Who Pays Main Costs

When Risk Transfers

EXW

All

Buyer

From seller’s premises

FOB

Sea

Seller – until loading

At loading onto ship

CIF

Sea

Seller (freight + insurance)

At loading onto ship

CPT

All

Seller (transport)

Handover to carrier

DAP

All

Seller (transport to place)

At destination place

DDP

All

Seller (all costs + customs)

At destination place

4. Practical Examples

EXW – You sell a fridge in Georgia; the buyer arranges shipping from your warehouse.
FOB – Seller in China loads goods onto the ship; risk and cost pass to buyer after loading.
CIF – Seller in Turkey pays sea transport and minimum insurance.
DAP – Seller delivers goods directly to buyer’s warehouse in Poland.
DDP – You ship to the USA and handle all customs and taxes.

5. Key Takeaways for a Sales Team Leader

Incoterms define both cost and risk, not just price.
During negotiations, you must know which term is acceptable for the company.
DDP = maximum responsibility for seller, EXW = minimum responsibility.
Often clients don’t understand the implications—you must protect the company’s interests.

6. Self-Check (End of Week)