Understanding Incoterms – A Guide by Sarsorti Spirits

Incoterms (International Commercial Terms) are standardized trade terms published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers for the delivery of goods under sales contracts. At Sarsorti Spirits, we work with various Incoterms daily  especially when using bonded warehouses and international logistics partners.

Here’s a simplified breakdown of each Incoterm 2020:

Group E – Departure

EXW (Ex Works)

• Seller’s responsibility: Makes goods available at their premises (factory, warehouse, etc.)

• Buyer’s responsibility: All transport, export duties, customs, and risks

• Used for: Maximum buyer control — often with buyers arranging pick-up

Group F – Main Carriage Unpaid

FCA (Free Carrier)

• Seller’s responsibility: Delivers goods to a named carrier or place (e.g. bonded warehouse)

• Buyer’s responsibility: Transport from that point onward, export/import handling

• Common in: Freight forwarding, bonded shipments, and container logistics

FAS (Free Alongside Ship)

• Seller’s responsibility: Places goods next to the vessel (at port)

• Buyer’s responsibility: Loading, ocean freight, import formalities

• Mostly used for: Bulk cargo or sea freight

FOB (Free on Board)

• Seller’s responsibility: Loads goods on the vessel

• Buyer’s responsibility: Ocean transport, unloading, duties, delivery

• Important note: Only used for sea or inland waterway transport

Group C – Main Carriage Paid

CFR (Cost and Freight)

• Seller’s responsibility: Pays for ocean transport to port of destination

• Buyer’s responsibility: Insurance, unloading, import duties

• Sea freight only

CIF (Cost, Insurance, Freight)

• Same as CFR but seller also provides insurance

• Still only valid for sea freight

CPT (Carriage Paid To)

• Seller’s responsibility: Pays freight to a named destination (air, land, or sea)

• Buyer’s responsibility: Risk passes once goods are handed to first carrier

CIP (Carriage and Insurance Paid To)

• Like CPT, but includes insurance coverage until named place

Group D – Arrival

DAP (Delivered at Place)

• Seller’s responsibility: Delivers goods to the agreed address (not yet cleared)

• Buyer’s responsibility: Unloading and import duties

• Most commonly used term in general trade

DPU (Delivered at Place Unloaded)

• Like DAP, but seller also unloads the goods

• Buyer handles import clearance

• Useful when buyer has no staff at delivery point

DDP (Delivered Duty Paid)

• Seller’s responsibility: All costs, including duties and taxes

• Buyer: Only receives the goods

• High-risk for sellers — used when seller wants to provide full-service delivery

Which Incoterm is best?

It depends on:

• Who arranges transport and insurance

• Whether goods are shipped via air, sea, or road

• Whether bonded warehouses are used

• What customs obligations apply in each country

At Sarsorti Spirits, the most common Incoterms we use include:

• FCA (to bonded warehouse or forwarder)

• DAP (direct delivery to buyer)

• EXW (when buyer handles all logistics)

• CIF/CFR (for sea freight on high-volume loads)

  Choosing the right Incoterm can make or break a deal especially with duty-free or bonded stock. Why? because you want the best structure for cost efficiency, risk reduction, and customs compliance.

  📩 Email us at team@sarsorti.com or include your preferred Incoterm when requesting a proforma.