Incoterms are divided into four categories – E, F, C, and D3.
This contains only one trade term – EXW, meaning Ex Works, where the buyer of a shipped product pays for the goods when they are delivered to a specific location.
Category F (Main Carriage Unpaid)
This contains three terms:
Free Carrier (FCA): The seller is responsible for the delivery of the goods to a destination that is specified by the buyer.
Free Alongside Ship (FAS): The goods are considered delivered when the seller’s ship arrives alongside the destination port.
Free on Board (FOB): This specifies whether the seller or the buyer is responsible for the goods that are damaged during shipping.
Category C (Main Carriage Paid)
This contains four trade terms:
Carriage Paid To (CPT): The seller delivers goods at their expense to a carrier that is nominated by the seller.
Carriage and Insurance Paid To (CIP): A seller pays freight and insurance to deliver the goods to a seller-appointed party at a location that is already agreed upon.
Cost and Freight (CFT): The seller transports goods by sea to a required port.
Cost, Insurance and Freight (CIF): The seller delivers goods at the port or procures goods that have already been delivered.
It contains three trade terms:
Delivery at Place (DAP): The seller is liable to pay the cost involved in delivery of goods to a location already agreed upon.
Delivered at Place Unloaded (DPU): The seller is required to deliver goods at the disposal of the buyer after the goods have been unloaded from the arriving means of transport.
Delivered Duty Paid (DDP): The seller delivers goods when they are placed at the disposal of the buyer, are cleared for import at the arriving means of transport and are ready for unloading at the decided destination.
These four categories can also be classified in terms of transportation:
• Intercoms for any transport - EXW, FCA, CPT, DPU, DAP, DDP
• Intercoms only for sea and inland waterway transport - FAS, FOB, CFR, CIF