Trade Guide
Incoterms Explained
The three-letter trade terms that decide who pays for freight, insurance, clearing and duty, and where the risk passes.
The Terms
The Common Incoterms
| Term | Seller pays to | Buyer pays |
|---|---|---|
| EXW (Ex Works) | Goods ready at the seller's premises | Everything from pickup, including export clearing |
| FCA (Free Carrier) | Handing goods to the buyer's carrier, export cleared | Main freight and everything after |
| FOB (Free On Board) | Goods loaded on the vessel, export cleared | Sea freight, insurance, import costs |
| CFR (Cost and Freight) | Sea freight to the destination port | Insurance, unloading and import costs |
| CIF (Cost, Insurance and Freight) | Sea freight and minimum insurance | Unloading and import costs |
| CPT / CIP | Carriage (and insurance for CIP) to the named place | Import costs |
| DAP (Delivered at Place) | Delivery to the named place, not unloaded | Import clearing, duty and VAT |
| DPU (Delivered at Place Unloaded) | Delivery and unloading at the named place | Import clearing, duty and VAT |
| DDP (Delivered Duty Paid) | Everything, including import duty and VAT | Nothing |
For Importers
Which Term Suits You
South African importers often buy FOB or FCA so their own forwarder controls the freight and the arrival. Remember that SARS values imports on an FOB basis, whatever term is on the invoice.
Unsure Which Term to Use?
WhatsApp 068 058 2700 and we explain the costs for your shipment.