INTERNATIONAL SHIPPING TERMS (INCOTERMS RULES) 2010
EXW Ex Works (named place)
“Ex works” means that the seller merely places the goods at the disposal of the buyer. Collection of the cargo from the seller’s premises is for the account of the buyer. This might be at the seller’s premises or any other named place (i.e. from the seller’s factory, warehouse etc). The term “ex works” also identifies the extent of the sellers risk in the transaction. The seller is solely responsible for the sale of the goods, but is not involved in any form of transport and / or export customs clearance.
The seller does not need to load the goods onto a collection vehicle, nor does he need to provide any specialised packing such as hazardous cargo packing. Should specialised packaging be required, the seller will charge the buyer with an additional amount.
The buyer is responsible and bears the entire cost and risk for bringing the goods to their final destination.
Commercial Invoice price to include : Cost of Goods
‘F’ INCOTERMS
FCA Free Carrier (named Place)
“Free Carrier” means that the pre- carriage of the goods is arranged by the seller. The seller delivers the goods to the carrier, be it by air or by sea, or to another person, as instructed by the buyer to a named place. The parties must make sure that the named place is specific as the named place of delivery is where the risk passes from the seller to the buyer.
Commercial Invoice price to include : Cost of Goods / Pre-carriage / Customs export formalities
FAS Free Alongside Ship
“Free Alongside Ship” means that the delivery of the goods by the seller is deemed to have taken place when he delivers the goods alongside the vessel
(This could be a ship, a quay or a barge) nominated by the buyer at the named port of shipment. The risk (loss or damage) passes from the seller to the buyer when the goods are alongside the vessel and ready to be loaded onto said vessel. The buyer is responsible for the loading costs and for all costs from that point . Neither is the seller responsible for the Export Customs Formalities. This term of sale is relatively common for cargo originating from the United States of America.
Commercial Invoice to include : Cost of Goods / Pre-carriage
FOB Free On Board
“Free On Board” means that the seller is required to deliver the goods on board a vessel, nominated by the buyer at the port of shipment. The seller pays for the packing of the cargo, the transport to the nearest port or airport, the loading of the cargo onto the ship or aeroplane and organises the Customs Formalities. This term of purchase is very common.
Commercial Invoice to include : Cost of Goods / Pre-carriage / loading charges / Export Customs Formalities
‘C’ INCOTERMS
CFR Cost and Freight
“ Cost And freight “means that the seller must pay all costs and freight to send the goods to the named port of destination. However, the risk is transferred to the buyer at the time the goods are loaded onto a vessel.
Commercial Invoice to include : Cost of Goods / Pre-carriage / Export Formalities / Carriage
CIF – Cost Insurance and Freight
“Cost Insurance and Freight” means the same as CFR except that the seller must also arrange and pay for the insurance (Maritime transport only)
Commercial Invoice to include : Cost of Goods / Pre-carriage / Export Formalities / Carriage / Insurance
CPT Carriage Paid To
“Carriage Paid To” means that the seller agrees to deliver the goods to the sellers nominated place, carrier or another person (this could be a warehouse, port or airport) at the sellers’ expense. In other words, the main carriage is arranged and paid for by the seller.
Commercial invoice price to include : Cost of goods / pre-carriage / Carriage / Customs Export Formalities
CIP Carriage And Insurance Paid to
“Carriage and Insurance Paid to” (also called CIF) means that the seller agrees to deliver the goods to the sellers nominated place, carrier or another person (this could be a warehouse, port/ airport) at the sellers expense. In other words, the seller arranges and pays for the goods to be shipped / airfreighted to port / airport of destination.
In addition the seller also contracts for insurance cover against the buyers’ risk of loss or damage during that transport. Under CIP terms the seller is only required to take out minimum insurance cover. It is recommended that the buyer take out their own “top up” insurance cover.
Commercial invoice price to include : Cost of Goods / Insurance / Pre-carriage / Carriage (Freight) Customs Export Formalities
‘D’ INCOTERMS.
DEQ Delivered at Quay
“Delivered at Quay” is a highly unusual term of purchase and means that the seller assumes the risk and costs of making the goods available at the quay in the agreed upon port.
Commercial Invoice to include : Cost of Goods / Pre-carriage / Carriage / Export Customs Formalities
DAT Delivered At Terminal
“Delivered at Terminal “means that the seller pays for the transport of the goods to the terminal (this would be a named terminal at the port or place of destination) This term excludes any costs related to import clearance.
The buyer takes over the risks once the goods are received into the terminal.
Commercial Invoice to include : Cost of Goods / Pre-carriage
DAP Delivered At Place
“Delivered at Place means” that the seller arranges and pays for all costs up to a named place. This excludes the costs related to the import clearance in the country of destination, but includes the on-carriage from the port of destination to the buyer’s door. The seller is responsible for all costs and all risks prior to the point that the goods are delivered to the named place.
Commercial Invoice to include : Cost of Goods / Pre-Carriage / Carriage / Export Formalities / On-Carriage
DDP Delivered Duty Paid
“Delivered Duty Paid” means that the seller is entirely responsible for the delivery of the goods to a named place ready for offloading. The seller is accountable and pays for all risks and costs involved in bringing the goods from the seller’s factory or warehouse to to their final destination.
The seller is required to undertake all export and import clearance functions.
The seller is also responsible for the payment of any duties and taxes related to the importation at destination of the shipment.
Commercial Invoice to include : Cost of Goods / Pre-carriage / Export Formalities / Carriage / Import Formalities / Payment of import Customs Duties
Anyone considering the international movement of freight should acquaint themselves with these INCOTERMS.
If you are feeling overwhelmed remember: We speak the lingo, so you don’t have to!
Get in touch today.