Incoterms are international rules that specify:
The cost of transportation assumed by the seller.
Where the risk of loss from seller to buyer is transmitted.
Who assumes the customs formalities.
Who pays the customs duties.
Who has to provide insurance coverage.
There are eleven Incoterms distributed in four categories:
E (EXW): The seller places the merchandise at the buyer's disposal in the seller's premises.
F (FCA, FAS, FOB): The seller delivers the merchandise to a carrier designated by the buyer.
C (CFR, CIF, CPT, CIP): The seller hires the transport but without assuming risk of loss or damage of the merchandise or additional costs due to the events that occurred after the loading and dispatch.
D (DAT DAP, DDP): The seller bears all costs and risks to the place of destination