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Incoterms 2010

The Incoterms rules or International Commercial terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) widely used in international commercial transactions. A series of three-letter trade terms related to common sales practices, the Incoterms rules are intended primarily to clearly communicate the tasks, costs and risks associated with the transportation and delivery of goods. The Incoterms rules are accepted by governments, legal authorities and practitioners worldwide for the interpretation of most commonly used terms in international trade. They are intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries. First published in 1936, the Incoterms rules have been periodically updated, with the eighth version— Incoterms 2010—having been published on January 1, 2011. "Incoterms" is a registered trademark of the ICC.

During the process of revision, which has taken about two years, ICC has done its best to invite views and responses to successive drafts from a wide ranging spectrum of world traders, represented as these various sectors are on the national committees through which ICC operates. Indeed, it has been gratifying to see that this revision process has attracted far more reaction from users around the world than any of the previous revisions of Incoterms. The result of this dialogue is Incoterms 2000, a version which when compared with Incoterms 1990 may appear to have effected few changes. It is clear, however, that Incoterms now enjoy world wide recognition and ICC has therefore decided to consolidate upon that recognition and avoid change for its own sake. On the other hand, serious efforts have been made to ensure that the wording used in Incoterms 2000 clearly and accurately reflects trade practice. Moreover, substantive changes have been made in two areas:

The 11 Incoterms consist of two groups and are listed below in order of increasing risk/liability to the exporter. Under the revised terms, buyers and sellers are being urged to contract precisely where delivery is made and what charges are covered. This should avoid double-billing of terminal handling charges at the port of discharge. References to "ship's rail" were taken out to clarify that delivery means "on-board" the vessel. Insurance, electronic documentation, and supply chain security are addressed in more detail, and gender-neutral language is now used.

The 7 rules defined by Incoterms 2010 for any mode(s) of transportation are:


  • EXW -Ex Works (named place of delivery)
  • The seller makes the goods available at its premises. The buyer is responsible for unloading. This term places the maximum obligation on the buyer and minimum obligations on the seller. The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included. EXW means that a seller has the goods ready for collection at his premises (works, factory, warehouse, plant) on the date agreed upon. The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination. The seller doesn't load the goods on collecting vehicles and doesn't clear them for export. If the seller does load the good, he does so at buyer's risk and cost. If parties wish seller to be responsible for the loading of the goods on departure and to bear the risk and all costs of such loading, this must be made clear by adding explicit wording to this effect in the contract of sale.


  • FCA -Free Carrier (named place of delivery)
  • The seller hands over the goods, cleared for export, into the disposal of the first carrier (named by the buyer) at the named place. The seller pays for carriage to the named point of delivery, and risk passes when the goods are handed over to the first carrier.


  • CPT -Carriage Paid To (named place of destination)
  • The seller pays for carriage. Risk transfers to buyer upon handing goods over to the first carrier.


  • CIP -Carriage and Insurance Paid to (named place of destination)
  • The containerized transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.


  • DAT -Delivered at Terminal (named terminal at port or place of destination)
  • Seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.


  • DAP -Delivered at Place (named place of destination)
  • Seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.


  • DPP -Delivered Duty Paid (named place of destination)
  • Seller is responsible for delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination including import duties and taxes. The buyer is responsible for unloading. This term is often used in place of the non-Incoterm "Free In Store (FIS)". This term places the maximum obligations on the seller and minimum obligations on the buyer.


The four rules defined by Incoterms 2010 for international trade where transportation is entirely conducted by water are:


  • FAS -Free alongside Ship (named port of shipment)
  • The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export. Suitable only for maritime transport but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). This term is typically used for heavy-lift or bulk cargo.


  • FOB - Free on Board(named port of shipment)
  • The seller must load the goods on board the vessel nominated by the buyer. Cost and risk are divided when the goods are actually on board of the vessel (this rule is new!). The seller must clear the goods for export. The term is applicable for maritime and inland waterway transport only butNOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). The buyer must instruct the seller the details of the vessel and the port where the goods are to be loaded, and there is no reference to, or provision for, the use of a carrier or forwarder. This term has been greatly misused over the last three decades ever since Incoterms 1980 explained that FCA should be used for container shipments.


  • CFR -Cost and Freight (named port of destination)
  • Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the vessel. Insurance for the goods is NOT included. This term is formerly known as CNF (C&F). Maritime transport only.


Incoterm 2010Export Customs declarat ionCarriage to POEUnloading of truck in POELoading charg es in POECarriage (Sea Freight/ Air Freight) to POIUnloading Charges in POELoading on truck in POICarriage to place of destinationInsuranceImport Customs clearanceImport taxes
EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer   Buyer Buyer
FCA Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer   Buyer Buyer
FAS Seller Seller Seller Buyer Buyer Buyer Buyer Buyer   Buyer Buyer
FOB Seller Seller Seller Seller Buyer Buyer Buyer Buyer   Buyer Buyer
CFR Seller Seller Seller Seller Seller Seller Buyer Buyer   Buyer Buyer
CIF Seller Seller Seller Seller Seller Seller Buyer Buyer Seller Buyer Seller
CPT Seller Seller Seller Seller Seller Seller Seller Seller   Buyer Buyer
CIP Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer
DAT Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer
DAP Seller Seller Seller Seller Seller Seller Seller     Seller Buyer
DDP Seller Seller Seller Seller Seller Seller Seller Seller   Seller Seller
CFR — Cost and Freight | CIF — Cost, Insurance and Freight | CIP — Carriage and Insurance Paid CPT — Carriage Paid To 
DAP — Delivered at Place DDP — Delivered Duty Paid DAT — Delivered at Terminal EXW — EX Works 
FAS — Free Alongside Ship FCA — Free Carrier | FOB — Free On Board

Incoterm Do Not...

  • Neither determines ownership or transfer title to the goods, nor evoke payment terms.
  • Apply to service contracts, nor define contractual rights or obligations (except fordelivery) or breach of contract remedies.
  • Protect parties from their own risk or loss, nor cover the goods before or after delivery.
  • Specify details of the transfer, transport, and delivery of the goods. Container loading is NOT considered packaging, and must be addressed in the sales contract.
  • Remember, Incoterms are not law and there is NO default Incoterm!

*POE- Port of Export | *POI- Port of Import