Incoterms (international commercial terms) are a series of 11 internationally recognised, universal terms that define and clarify the obligations between buyers and sellers, and is published by the International Chamber of Commerce (ICC).
Incoterms clarify the responsibilities of buyers and sellers in international trade contracts. They are used to avoid confusion. Incoterms are separated by modes of transport, including any mode of transport and sea or inland waterway transport. Some important points are that incoterms are not a substitute for a complete contract, and the 2020 version updated some security cost responsibilities.
❝First published by ICC in 1936, Incoterms® rules are a set of eleven three-letter trade terms, reflecting business-to-business practice in contracts for the sale and purchase of goods.❞
📚 Read more from the International Chamber of Commerce
This article explains the most common incoterms. For information on how to manage your incoterm settings, see the Incoterm settings article.
Shipping DAP/DDU or DDP
There are 11 different incoterms, each of which applies to a different mode of transport and set of responsibilities. Incoterms supported by Shippit are:
Incoterm | Full name | Description |
| Delivered Duty Unpaid | Receiver pays duties and taxes upon arrival |
| Delivered Duty Paid | Sender pays all duties and taxes before delivery |
| Ex Works | Buyer is responsible for all transport and customs from seller’s premises |
| Free Carrier | Seller delivers goods to a carrier or another person nominated by the buyer |
| Carriage Paid To | Seller pays carriage to the named destination, risk transfers to buyer upon handing to carrier |
| Cost and Freight | Seller pays costs and freight to destination port, risk transfers at shipment |
| Carriage and Insurance Paid To | Seller pays carriage and insurance to destination, risk transfers to buyer upon handing to carrier |
| Cost, Insurance and Freight | Seller pays costs, insurance, and freight to destination port, risk transfers at shipment |
| Delivered At Frontier | Seller delivers goods to a named border point before customs border |
| Delivered At Terminal | Seller delivers goods unloaded at a named terminal |
| Delivered At Place | Seller delivers goods ready for unloading at the named place, buyer pays duties and taxes |
| Delivered at Place Unloaded | Seller delivers goods unloaded at the named place |
| Delivered Ex Ship | Seller delivers goods on board the ship at the destination port |
| Delivered Ex Quay | Seller delivers goods on the quay at the destination port |
| Free Alongside Ship | Seller delivers goods alongside the vessel at the port of shipment |
| Free On Board | Seller delivers goods on board the vessel at the port of shipment |
Common incoterms
The most common incoterms used for retail international shipping are:
Delivered at place, or delivered duty unpaid (DAP/DDU)
The seller delivers the goods to the buyer's designated place at the destination. The buyer is responsible for all costs and risks associated with transporting the goods to the destination, including customs clearance fees, duty fees, and taxes when the import arrives.
Delivered duty unpaid (DDU) was officially replaced by delivered at place (DAP) in the Incoterms 2010 revision that went into effect on 1 January, 2011. Shippit supports carriers that use the older terminology, so you might see both terms used interchangeably, depending on what carrier you are using.
When you ship DAP/DDU, the price your customer sees at the checkout is not the final price that they need to pay. This has the potential to cause confusion, and so it is important that you communicate to your customers that additional fees and charges could be applied as their order moves through the network.
For more information about shipping DDP or DAP/DDU with Shippit, see the Shipping DDP and DDU article.
Delivered duty paid (DDP)
The seller delivers the goods to the buyer's designated place at the destination, pays all customs duties and taxes, and is responsible for all costs and risks associated with transporting the goods to the destination, including unloading the goods from the carrier.
When you ship DDP, the price your customer sees at the checkout is the final price that they are charged, including all fees, duties, and taxes. This means they see a higher shipping price, but that they are not surprised by additional fees later on.
💡NOTE: If you are shipping goods internationally with Australia Post, your account defaults to DAP/DDU. You can change this to DDP by adding the appropriate AGPL product codes. For more information, see the get to know Australia Post article.
For more information about shipping DDP or DAP/DDU with Shippit, see the Shipping DDP and DDU article.