The purpose of Incoterms is to provide a set of international rules for the most commonly used trade terms in international trade. Incoterms are terms of delivery, not terms of sale. When incorporated into a contract of sale, they are used to determine the division of the risks and costs of shipping between buyer and seller. Understanding the Incoterm for your international transaction, whether you are the buyer or seller (or just the shipper or consignee in the event there is no sale involved) is important in order to avoid misunderstandings and possible unexpected expenses. Each Incoterm requires a “named place” at origin or destination (depending on the Incoterm) which should be as specific as possible to protect both buyer and seller. Insurance companies may accept or deny a claim based on the Incoterm and where and when loss or damage occurred – if your named place is unclear, insurance cover that you think is in place may be denied, especially if you are the buyer and the insurance was placed by the seller. Incoterms for ANY MODE of transportation: EXW EX-Works: Named place of origin FCA Free Carrier: Named place of origin CPT Carriage Paid To: Named place of destination CIP Carriage and Insurance Paid To: Named place of destination DPU Delivered At Place Unloaded : Named place of destination DAP Delivered At Place: Named place of destination DDP Delivered Duty Paid: Named place of destination Incoterms for OCEAN FREIGHT only: FAS Free Alongside Ship: Named port of shipment FOB Free On Board: Named port of shipment CFR Cost and Freight: Named port of destination CIF Cost, Insurance and Freight: Named port of destination INCOTERMS 2020 replaces INCOTERMS 2010 effective January 2020. There are some minor changes, so it is important to specify which version of INCOTERMS applies to a particular contract.