INCOTERMS : Who takes the risks ?

Incoterms have been made to determine the repartition of the logistic costs between sellers and buyers but also the split of the risks.

In order to avoid any confusion regarding the risks incumbing to all parties, it is recommended to memorize the 4 INCOTERMS families in following order, bearing in mind
that the first family (E) implies the minimum of risks for the vendor, and the fourth family (D), the maximum.

1-Family “E” = Ex Works
Merchandise travels at buyer’s risks

2- Family “F” = FCA – FAS – FOB
Merchandise travels at buyer’s risks as soon as it has been remitted to the carrier of
its choice.

2-Family “C” = CFR – CPT – CIF – CIP
Merchandise travels at buyer’s risks as soon as it has been remitted to the carrier contractually chosen by the vendor.

4-Family “D” = DAF – DES – DEQ – DDU – DDP
Merchandise travels at vendor’s risks up to country of destination all the way through.

Cases 1 – 2 – 3 are qualified of “SALE AT DEPARTURE” = merchandise travels on main carrier at buyer’s risks.

Case 4 is qualified of “SALE AT ARRIVAL” = merchandise travels on main carrier
at vendor’s risks.