What Are Incoterms?
Incoterms are standard rules published by the International Chamber of Commerce (ICC) that define who pays for transport, where risk passes from seller to buyer, and who handles export and import clearance. The current version is Incoterms 2020, which contains 11 rules.
Two Groups of Rules
- Any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU, DDP
- Sea and inland waterway only: FAS, FOB, CFR, CIF
For containerised cargo, FCA and CIP are generally recommended over FOB and CIF, because containers are usually handed over at a terminal before they are loaded on board.
The Rules That Matter Most for Importers
- EXW (Ex Works): maximum obligation for the buyer — loading, export clearance and all transport are the buyer's responsibility
- FCA (Free Carrier): the seller clears the goods for export and hands them to the buyer's carrier — a balanced and widely used option
- CIP / CIF: the seller pays for carriage and insurance, but risk passes to the buyer once goods are handed to the first carrier (CIP) or placed on board (CIF). CIP requires broader insurance cover (Institute Cargo Clauses "A")
- DAP (Delivered at Place): the seller delivers to the named destination; import duties and customs clearance remain with the buyer
- DDP (Delivered Duty Paid): the seller takes on everything, including import duties and VAT — but it is often impractical for a foreign seller to act as importer of record in Azerbaijan
What to Watch When Choosing
- Always state the rule with a precise place: e.g. "FCA Istanbul, seller's warehouse, Incoterms 2020"
- Compare all offers on the same Incoterms basis — otherwise prices are not comparable
- Align insurance with the point where risk transfers
- Incoterms do not govern transfer of ownership or payment terms — these must be set out separately in the contract
Logistics with Supply Base Azerbaijan
Supply Base Azerbaijan coordinates the full process from supplier selection to delivery and prepares every offer on the delivery term that suits you best. See our RFQ guide for more.
