First of all, what is Import export incoterms ? Import export Incoterms are a set of 11 international rules which define the responsibilities of sellers and buyers. Incoterms specifies who is responsible for payment of the shipment, customs clearance, documentation insurance and other logistical activities.
For all modes of Transport
EXW – Ex Works
EXW is an trade term internationally. It describes when a seller makes a product available at a specific location. The buyer of the product must cover full costs, risks, loading, moving the goods from there to destination and arrangement for the export clearance.
FCA – Free Carrier
FCA is a trade term where the seller includes transportation costs in its price and bears the risk of loss until the carrier receives the goods. Once the seller delivers the goods to the carrier, the buyer bears all responsibility for the good. In FCA, the seller of goods is responsible to deliver goods to a destination specified by the buyer. As a matter of fact, the seller is only responsible to deliver to the specified destination but isn’t obligated to unload the goods. The destination may be an airport, shipping terminal, warehouse, or other location where the carrier operates.
CPT – Carriage Paid To
CPT is an trade term where the seller incurs the risks and costs associated with delivering goods to a carrier to an agreed-upon location. For multiple carriers, the risks and costs transfer to the buyer upon delivery to the first carrier. In addition, CPT costs include export fees and taxes. The risk transfers from the seller to the buyer by handing over goods to the carrier chosen by the seller.
CIP – Carriage And Insurance Paid To
CIP is used when a seller pays freight cost and insurance to deliver goods to a seller-nominated party at an agreed-upon location. The Seller delivers and transfers risk of loss or damage of goods by handing over to the carrier or appointed person. Transport may be by road, rail, sea, inland waterway, air, or multimodal transport.
DPU – Delivered At Named Place, Unloaded
DPU means the seller is fully responsible for clearing the goods for export and bears all risks and costs associated with delivering the goods. Seller is also responsible unloading goods at the named port or place of destination. After that, the buyer is responsible for all costs and risks from this point. Buyer is responsible clearing the goods for import at the named country of destination. This is the only Incoterms where the seller must pay for unloading at destination.
DAP – Delivered At Place
DAP is an international trade term which we use to deal goods. Seller agrees to pay all costs and bears any potential losses of moving goods sold to a specific location. The seller is also responsible for arranging carriage and for delivering the goods, ready for unloading at the named place. The risk transfers from seller to buyer when the goods are available for unloading at named place. So unloading is at the buyer’s risk. The buyer is responsible for import clearance, import duties and any applicable local taxes.
DDP – Delivered Duty Paid
DDP is a delivery agreement where the seller bears all responsibility of transporting the goods until they reach at destination port. Delivered duty paid is a shipping agreement that places all responsibility on the seller. The seller is obligated to bear everything like shipping costs, export and import duties, insurance, and any other expenses incurred during shipping until they reach an agreed-upon destination. The risk transfers from seller to the buyer once the goods are made available to the buyer at the port of destination.
Ocean freight usage only
FAS – Free Alongside Ship
FAS is one of 11 Import export incoterms. In FAS, the Seller delivers the goods to the buyer when the goods are cleared for export then placed alongside the ship nominated by the buyer at the named port of shipment. From that point, the buyer bears all costs and risks of damage and loss.
FOB – Free On Board
FOB means the seller is responsible for transportation of the goods up to the port of shipment and the cost of loading also. The buyer is responsible for ocean freight, insurance, unloading, and transportation from the arrival port to the final destination. In addition, the seller passes the risk to the buyer when the goods are loaded on board at the port of shipment.
CFR – Cost And Freight
Cost and freight specifies that the seller of the goods is responsible to arrange for the carriage of goods by sea to the port of destination. Seller also provides to the buyer with the necessary documents to obtain the goods from the carrier. Actually, the seller is not responsible for securing insurance for the cargo for loss or damage during transportation. The buyer bears all risks of loss or damage once goods on board.
CIF – Cost Insurance And Freight
CIF is a method of import export shipping to cover the costs, insurance, and freight of of sales contract. The seller delivers the goods to the port of destination. The buyer bears all risks of loss or damage once goods on board. The Seller purchases the cargo insurance to the named port of destination. In addition, if the goods requires additional customs duties, export paperwork or inspections or rerouting, the seller will cover these expenses also.