Incoterms are international rules that specify:
The cost of transportation borne by the seller.
Where the risk of loss is transferred from the seller to the buyer.
Who is responsible for customs formalities.
Who pays customs duties.
Who must provide insurance coverage.
There are eleven Incoterms distributed in four categories:
E (EXW): The seller places the goods at the buyer's disposal at the seller's premises.
F (FCA, FAS, FOB): The seller delivers the goods to a carrier designated by the buyer.
C (CFR, CIF, CPT, CIP): The seller contracts for transportation but does not assume the risk of loss or damage to the goods or additional costs due to events occurring after loading and clearance.
D (DAT, DAP, DDP): The seller bears all costs and risks up to the destination.