What Are Incoterms?
Incoterms (International Commercial Terms) are a set of rules published by the International Chamber of Commerce (ICC) that define at which point costs, risk and responsibility pass between buyer and seller. The current version is Incoterms 2020 and it contains 11 delivery terms. In a contract the term is cited as a single abbreviation - such as "FCA Konya" - and that abbreviation settles the division of duties between the parties.
The Rule Groups
- E group - EXW (Ex Works): the seller makes the goods available at its own premises; everything, including loading, belongs to the buyer. Lightest for the seller, heaviest for the buyer.
- F group - FCA, FAS, FOB: the seller hands the goods to the carrier nominated by the buyer; the buyer pays the main freight. In road vehicle export, FCA is the most common.
- C group - CPT, CIP, CFR, CIF: the seller pays for the main carriage, but risk passes to the buyer when the goods are handed to the carrier. Under CIP the seller must also take out comprehensive transport insurance.
- D group - DAP, DPU, DDP: the seller carries the goods to the destination. Under DAP import customs belong to the buyer; under DDP everything including taxes stays with the seller.
FAS, FOB, CFR and CIF are for sea transport only; using them for vehicles delivered by road, such as trailers, is a mistake - the correct road equivalents are FCA, CPT and CIP.
Common Scenarios in Trailer Export
- EXW: the buyer's own truck collects the vehicle from the factory; experienced importers prefer it.
- FCA: the vehicle is delivered to the buyer's contracted carrier or to the border crossing; the risk split is balanced.
- CIP: the seller covers carriage and insurance; comfortable for the buyer, with the cost reflected in the freight.
- DAP: the vehicle is taken to the buyer's address; import duties remain with the buyer.
- DDP: the turnkey option; the seller incurs tax and customs obligations in the destination country, so it is advisable only in well-known markets.
Core Export Documents
The delivery term also affects who holds which documents. A typical road vehicle export file includes:
- Proforma and commercial invoice - the written record of the price and the delivery term.
- Packing list - the breakdown of the vehicle and any accompanying accessories or spare parts.
- CMR consignment note - the contract document of road carriage.
- CoC (Certificate of Conformity) - shows the vehicle conforms to its type approval; required for registration in the destination country.
- ATR movement certificate - provides customs duty advantages for industrial goods within the Türkiye-EU Customs Union.
- EUR.1 / certificate of origin - used for preferential tariffs in countries with a free trade agreement.
Practical Advice
- Write the delivery term into the contract and the invoice together with the named place: "DAP Bucharest, Incoterms 2020".
- Check that the point where risk transfers and the insurance cover meet; in the C group, risk transfers early.
- Verify the document set in advance against the destination country's registration authority; a missing CoC is the most frequent reason a vehicle waits at customs.
Barlas Trailer's export team walks the whole process together with the buyer - from choosing the delivery term to preparing the document set including CoC, ATR/EUR.1 and CMR.