Incoterms (International Commercial Terms) are the standard rules, published by the International Chamber of Commerce, that define who is responsible for cost, risk and insurance at each stage of an international shipment. Getting them right avoids expensive disputes.
The 11 Incoterms 2020 rules
For any transport mode:
- EXW (Ex Works) — buyer collects from seller's premises; buyer bears almost everything.
- FCA (Free Carrier) — seller delivers to a named carrier/place.
- CPT / CIP (Carriage Paid To / Carriage & Insurance Paid To) — seller pays carriage (and insurance for CIP) to destination.
- DAP / DPU / DDP — seller delivers to destination; DDP means seller even clears import customs and pays duties.
For sea and inland waterway only:
- FAS / FOB — seller delivers alongside/on board the vessel; risk passes at the port of loading.
- CFR / CIF — seller pays freight (and insurance for CIF) to the destination port, but risk passes once cargo is on board.
The three most common in UAE trade
- FOB — popular for imports; you control the main freight leg and forwarder.
- CIF — the seller arranges freight and insurance to Jebel Ali/your port; simpler but you have less control.
- DDP — the seller handles everything to your door, including UAE import clearance and the 5% GCC duty; convenient but priced in.
How to choose
Pick the term that matches how much of the journey you want to control. Buyers who want the best freight rates often prefer FOB and appoint their own forwarder. If you would rather not manage logistics at all, CIF or DDP shift that work to the seller — at a cost.
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