What does Incoterms mean? Can anyone explain each one of them in layman’s terms? Much appreciated.

Question

Would like to know what incoterms are and when each of them are used and why. Thanks in advance

In: 0

Answer 1

I work in oil trading. They’re effectively a way of saying when does the oil I’ve bought become mine (title) and how is it getting here (freight) and who’s paying for the freight.

Our most common, as an oil supplier is FOB, free on board. Here we make the oil available on an agreed date, and you have to arrange the ship and have the ship arrive on time. Once the oil is onboard, it’s yours and you can take it where you like.

Next is DAP, delivered at place. Here as a buyer, we agree to buy the oil but you pay for the ship and arrange for it to arrive on the agreed date but you still own the oil. Once the oil is ashore, it’s ours.

Then finally CFR, carriage and freight. Here you buy the oil and it’s yours as soon as it’s on the ship. But we load it when we like, pay for the ship and arrange for it to arrive when you want it

They’re the three most common ones we use for bulk oil. The rest are more for containers or packaged goods

Answer 2

I work in oil trading. They’re effectively a way of saying when does the oil I’ve bought become mine (title) and how is it getting here (freight) and who’s paying for the freight.

Our most common, as an oil supplier is FOB, free on board. Here we make the oil available on an agreed date, and you have to arrange the ship and have the ship arrive on time. Once the oil is onboard, it’s yours and you can take it where you like.

Next is DAP, delivered at place. Here as a buyer, we agree to buy the oil but you pay for the ship and arrange for it to arrive on the agreed date but you still own the oil. Once the oil is ashore, it’s ours.

Then finally CFR, carriage and freight. Here you buy the oil and it’s yours as soon as it’s on the ship. But we load it when we like, pay for the ship and arrange for it to arrive when you want it

They’re the three most common ones we use for bulk oil. The rest are more for containers or packaged goods