For business terminology to be effective, phrases must mean the same thing throughout the industry. That is why the International Chamber of Commerce created "Incoterms" in 1936. Incoterms are designed to create a bridge between different members of the industry by acting as a uniform language they can use. It is vital that exporters and importers are familiar with these terms, as they identify the precise moment when ownership of goods passes from seller to buyer. The inclusion of Inco terms in a sales agreement commits the buyer and seller to a strict interpretation of these standard definitions.

Each Incoterm refers to a type of agreement for the purchase and shipping of goods internationally. There are 13 different terms, each of which helps users deal with different situations involving the movement of goods. For example, the term FCA is often used with shipments involving Ro/Ro or container transport; DDU assists with situations found in intermodal or courier service-based shipments.

Incoterms are most frequently listed by category. Terms beginning with F refer to shipments where the primary cost of shipping is not paid for by the seller. Terms beginning with C deal with shipments where the seller pays for shipping. E terms occur when a seller's responsibilities are fulfilled when goods are ready to depart from their facilities. D terms cover shipments where the shipper/seller's responsibility ends when the goods arrive at some specific point. Because shipments are moving into a country, D terms usually involve the services of a customs broker and a freight forwarder. In addition, D terms also deal with the pier or docking charges found at virtually all ports and determining who is responsible for each charge.

Recently the ICC changed basic aspects of the definitions of a number of Incoterms, buyers and sellers should be aware of this. Terms that have changed have a star alongside them.

Incoterms 2000

EXW EX WORKS (...named place)