15 Essential International Trade Terms You Should Know

15 Essential International Trade Terms You Should Know

International trade uses a shared vocabulary to describe costs, responsibilities, cargo quantities, and transport arrangements. Understanding these terms makes quotations and shipment instructions easier to evaluate.

Common Delivery Terms

The following are simplified explanations of frequently used Incoterms® rules:

1. EXW — Ex Works: Goods are made available at the named place.
2. FCA — Free Carrier: Goods are delivered to the nominated carrier at the agreed place.
3. FOB — Free On Board: Goods are delivered on board the vessel at the shipment port.
4. CFR — Cost and Freight: The seller pays freight to the destination port.
5. CIF — Cost, Insurance and Freight: The seller also arranges the required insurance.
6. CPT — Carriage Paid To: The seller pays carriage to the named destination.
7. CIP — Carriage and Insurance Paid To: The seller pays carriage and arranges insurance.
8. DAP — Delivered at Place: Goods arrive ready for unloading at the named destination.
9. DPU — Delivered at Place Unloaded: Goods are delivered after unloading.
10. DDP — Delivered Duty Paid: The seller handles delivery and import clearance obligations.

Each rule has a specific point where risk transfers; paying freight does not necessarily mean bearing risk throughout the journey. International Chamber of Commerce

Common Shipping Terms

11. FCL: Full Container Load.
12. LCL: Less than Container Load.
13. CBM: Cubic metres, used to measure cargo volume.
14. B/L: Bill of Lading.
15. HS Code: A customs classification code for goods.

Why Does Precise Wording Matter?

A clear quotation should identify the applicable Incoterm, named place or port, and included charges. This helps both parties understand the scope of the offer.