INCO: Terms To Know For Shipping in 2022

INCO: Terms To Know For Shipping in 2022

Are you trying to gain a stronger understanding of INCO shipping terms? We've got you covered! Have a look at this Incoterms overview for the details.

Did you know that in 2019, companies moved 11.84 billion tons of freight by truck? Freight is more a part of our lives than people think. Do you buy, sell, or transport freight? If so, knowing the jargon will help your day-to-day life. 

Freight INCO terms (International Commercial Terms) are specific wording used within contracts. Contracts made during importing or exporting goods will use these terms. 

They are set to state the liable parties for each shipment stage. They will also decide which party will cover which costs.

These terms are often referred to as ICC. ICC stands for International Commercial Terms.

Now that you know roughly what the term means, let's look a bit closer into it. Keep reading to find out more about INCO terms.

INCO Shipping Terms

There are many different INCO terms, such as DAP. But, what does DAP mean? 

These terms are all legally binding and run the risk of being misunderstood by some people. Learning the difference can save you from making expensive mistakes.

Delivered At Place (DAP)

Delivered at place is the cheapest option for buyers. The supplier has liability from leaving to arriving. The moment the buyer received the delivery, they also take the liability.

Ex Works (EXW)

Ex works means the buyer will be liable for the shipment the moment it leaves the supplier. The buyer will also be responsible for any charges that will develop. These charges can be at varying sections during this transportation.

Free On Board (FOB)

Free on board is the process of shipping overseas from one area to another. 'Free' states that the supplier is obligated to send the shipment to a previously set location. 'On Board' states that they will be doing this via a ship.

This INCO shipping term means that the supplier is liable for the goods leading up to the ship. Once onboard, the liability swaps over to the buyer.

Free Carrier (FCA)

Free carrier is similar to free on board. With free onboard, the seller is liable until it reaches the boat.

But, with free carrier, the seller retains the liability up until it leaves the ship. Once the cargo is off the boat, the buyer then takes liability.

Free Alongside Ship (FAS)

Free alongside ship states the seller is liable for the shipment before the cargo goes onto the boat. The seller is liable for loading it onto the ship and transportation afterward.

Carriage Paid To (CPT)

Carriage paid to is where the seller is liable for all that happens within their country. This liability will end once the cargo reaches the buyer's warehouse in that country.

Once the cargo leaves the warehouse, it will travel to the ship. The seller will have responsibility for the rest of the journey. But, the seller is still responsible for booking the trip to the buyer's country.

Carriage And Insurance Paid To (CIP)

Carriage and insurance are paid to, states the seller is liable for the cargo. This liability lasts up until it reaches the transportation method. After this, the buyer takes the liability.

However, the seller will also only cover limited costs. Namely, the delivery and insurance of the goods up until this point. The seller will have to foot the bill for the remaining journey.

Cost And Freight (CFR)

Cost and freight says the seller's liability covers all until it boards the ship. They are also responsible for the main carriage. However, they are not liable for this section. 

Cost Insurance and Freight (CIF)

Cost, insurance, and freight is where the seller is liable for everything within their country. This liability ceases once the cargo reached the outgoing warehouse. It's the same as Carriage Paid To mentioned above.

The main difference is that the seller is also responsible for the main carriage insurance. 

Delivered At Place Unloaded (DPU)

Delivered at place unloaded, states that the seller arranges the transportation charges. All transportation costs relating to both countries. The buyer will pay for the other expenses.

This means the seller is liable for everything that happens throughout the journey. The buyer pays their costs and waits for the arrival.

Delivered Duty Paid (DDP)

Delivered duty paid is where the seller arranges everything. This will include any transportation within the buyer's country. The buyer will only have to take liability when unloading the goods upon arrival. 

Air Freight INCO Terms

The vast majority of INCO terms will not only apply for seaborne shipments. They will also apply for airborne shipments. In place of the ship, the freight will be transported by cargo plane.

Some INCO terms are solely for seaborne transportation. For example, FOB, FAS, CFR, and CIF.

Importance of INCO Terms

As stated above, INCO terms are legally binding terms used within a contract. Once the agreement has been finalized, there is no changing it.

Ensuring you understand the different terms will allow you to make sure you understand the contract. Make sure you don't incur more payments than you would expect.

On Land Transportation


Once the cargo has reached the buyer's port. There are multiple types of transportation you can use—for example, FTL and LTL freight.

Full Truck Load (FTL)

Full truckload is the standard transportation for carrying the larger shipments from the port to the final destination. There will be only one cargo within each shipment. Your cargo will go straight from the docks to you.

Less Than Load (LTL)

You will use a Less than load for the smaller shipments. It may mean your cargo is on a truck alongside other cargo. You will be part of a list of delivery locations before your shipment arrives with you.

Now You Know INCO

Hopefully, now you have a far better understanding of INCO terms. Look out for how much each side will be liable for. Make sure you don't have to pay more than you should.

Go ahead and contact us to enquire about our services.

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