INCOTERMS
Organisations
involved in international freight transactions will find the below explanations
of international standard terms useful in outlining risks and responsibilities
between buyers and sellers.
EXW (Ex Works)
The buyer bears all costs and risks involved in taking the goods from
the seller's premises to the desired destination. The seller's obligation is to
make the goods available at his premises (works, factory, warehouse).
This term represents minimum obligation for the seller. This term can be used
across all modes of transport.
FCA (Free Carrier)
The seller's obligation is to hand over the goods, cleared for export,
into the charge of the carrier named by the buyer at the named place or point.
If no precise point is indicated by the buyer, the seller may choose within the
place or range stipulated where the carrier shall take the goods into his
charge. When the seller's assistance is required in making the contract with
the carrier the seller may act at the buyers risk and expense. This term can be
used across all modes of transport.
CPT (Carriage paid to.)
The seller pays the freight for the carriage of goods to the named
destination. The risk of loss or damage to the goods occurring after the
delivery has been made to the carrier is transferred from the seller to the
buyer. This term requires the seller to clear the goods for export and can be
used across all modes of transport.
CIP (Carriage and insurance paid to.)
The seller has the same obligations as under CPT but has the responsibility
of obtaining insurance against the buyer's risk of loss or damage of goods
during the carriage. The seller is required to clear the goods for export
however is only required to obtain insurance on minimum coverage. This term
requires the seller to clear the goods for export and can be used across all
modes of transport.
DAF (Delivered at Frontier)
The seller has fulfilled his obligation when
the goods have been made available, cleared for export, at the named point and
place at the frontier, but before the customs border of the adjoining country.
The term 'frontier' may be used for any frontier including that of the country
of export. Therefore, it is important that the frontier in question be defined
precisely by always naming the point and place in the term. The term is
generally used when goods are to be carried by rail or road, but may be used
for any mode of transport.
DDU (Delivered duty unpaid)
The seller is required to deliver the goods to
the named place in the country of importation. The seller is responsible for
costs and risks involved in bringing the goods to the import destination
(excluding duties, taxes) and arranging customs formalities. This term may be
used irrespective of the mode of transport.
DDP (Delivered duty paid)
Similar to DDU however in this case the seller is responsible for
delivering the goods in the named place in the country of importation, all
costs and risks in bringing the goods to import destination including duties,
taxes and customs formalities. This term may be used irrespective of the mode
of transport.
FAS (Free Alongside ship)
The seller has fulfilled his obligation when
goods have been placed alongside the vessel at the port of shipment. The buyer
is responsible for all costs and risks of loss or damage to the goods from that
moment. The buyer is also required to clear the goods for export. This term
should only be used for sea or inland waterway transport.
FOB (Free on Board)
Once the goods have passed over the ship's rail
at the port of export the buyer is responsible for all costs and risks of loss
or damage to the goods from that point. The seller is required to clear the
goods for export. This term should only be used for sea or inland waterway
transport.
CFR (Cost and Freight)
The seller must pay the costs and freight
required in bringing the goods to the named port of destination. The risk of
loss or damage is transferred from seller to buyer when the goods pass over the
ship's rail in the port of shipment. The seller is required to clear the goods
for export. This term should only be used for sea or inland waterway transport.
CIF (Cost, Insurance and Freight)
The seller has the same obligations as under CFR however he is also
required to provide insurance against the buyer's risk of loss or damage to the
goods during transit. The seller is required to clear the goods for export.
This term should only be used for sea or inland waterway transport.
DES (Delivered Ex Ship)
The seller has fulfilled his obligation to deliver when the goods are
available to the buyer on board the ship uncleared for import at the main port
of destination. The seller is responsible for all costs and risk of loss or
damage in bringing the goods to the named port of destination. This term should
only be used for sea or inland waterway transport.
DEQ (Delivered Ex Quay)
The seller has fulfilled his obligation to
deliver when the goods are available to the buyer on the quay (wharf) at the
named port of destination, cleared for importation. The seller is responsible
for all risks and costs including duties, taxes in making available the goods
at the port of destination. This term should only be used for sea or inland
waterway transport.