TABLE OF CONTENTS
Incoterm Rules for Any Mode of Transportation
- EXW (Ex Works)
- FCA (Free Carrier)
- CPT (Carriage Paid To) & CIP (Carriage and Insurance Paid To)
- DPU (Delivered at Place Unloaded)
- DDP (Delivery Duty Paid)
Incoterm Rules for Sea and Inland Waterway Transport
Incoterm Rules for Any Mode of Transportation
These seven incoterm rules can be selected for any mode of transportation.
1. EXW (Ex Works)
EXW means the seller makes the goods available to the buyer at a specific location, like a factory or warehouse. The seller doesn’t load the goods onto a vehicle or handle export clearance. Once the goods are ready at the location, it’s up to the buyer to take care of transportation and export processes.
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2. FCA (Free Carrier)
FCA is applicable for the following delivery options:
- Option 1: If the delivery location is the seller's place (like their warehouse or factory), the goods are considered delivered when they are loaded onto the transport vehicle arranged by the buyer.
- Option 2: If the delivery location is somewhere else (not the seller’s place), the goods are delivered when they arrive at that location. They must already be on the seller’s transport vehicle, ready for unloading, and handed over to the transport company chosen by the buyer.
For both options, that delivery point is where the buyer becomes responsible for the risk and care of the goods.
3 - 4. CPT (Carriage Paid To) & CIP (Carriage and Insurance Paid To)
CPT means that the seller is responsible for delivering the goods to the carrier they have chosen and pays for the transportation costs to the agreed destination. Once the goods are handed over to the carrier, the risk shifts to the buyer. This could mean physically passing the goods to the carrier at the right location, depending on the type of transport being used.
CIP means the seller is responsible for delivering the goods to the carrier they chose and arranged. Once the goods are handed over to the carrier, the risk shifts to the buyer. The seller must also provide insurance to cover any loss or damage to the goods during transport, from the point they are delivered to the carrier up to at least the destination. This ensures the buyer is protected during the shipment.
5. DAP (Delivered at Place)
DAP means that the seller is responsible for delivering the goods to the agreed location and making them ready for the buyer to unload. The seller takes care of all the risks and costs involved in getting the goods to the destination. Once the goods arrive at the destination and are ready for unloading, the responsibility shifts to the buyer.
6. DPU (Delivered at Place Unloaded)
DPU (Delivered at Place Unloaded) means the seller is responsible for delivering the goods to the agreed location and unloading them for the buyer. The seller takes care of all the risks and costs involved in getting the goods to the destination and unloading them. Once the goods are unloaded and ready for the buyer to pick up at the agreed place, the responsibility shifts to the buyer. This is the only shipping term where the seller must unload the goods at the destination.
7. DDP (Delivery Duty Paid)
DDP is when the seller delivers the goods to the buyer, cleared for import on the arriving means of transportation, ready for unloading, at the named place of destination. Seller bears all risks involved in bringing the goods to the named destination (i.e. delivery and arrival at destination are the same).
Incoterm Rules for Sea and Inland Waterway Transport
There are four Incoterm rules specific to sea and waterway modes of transportation.
1. FAS (Free Alongside Ship)
FAS means the seller's job is done once the goods are placed next to the buyer's ship at the agreed port. This could mean placing the goods on a dock or barge beside the ship. At that point, the risk of the goods being damaged or lost moves from the seller to the buyer.
When to use: This term is only for sea or inland waterway transport when the goods will be delivered right next to a vessel for loading.
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2. FOB (Free on Board)
FOB means the seller is responsible for getting the goods onto the ship chosen by the buyer at the agreed port of shipment. Once the goods are on the ship, the risk of loss or damage transfers to the buyer. From that point onward, the buyer is responsible for the goods.
When to use: FOB is only used for sea or inland waterway transport where the goods are delivered onto a vessel.
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3. CFR (Cost and Freight)
CFR (Cost and Freight) means the seller is responsible for delivering the goods onto the ship or ensuring they are already loaded. Once the goods are on board, the risk of loss or damage transfers to the buyer.
When to use: Only used for sea or inland waterway transport. If other types of transport are needed, CPT should be used instead.
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4. CIF (Cost Insurance and Freight)
CIF (Cost, Insurance, and Freight) means the seller is responsible for delivering the goods onboard the ship or making sure they are already there. Once the goods are on the ship, any risk of loss or damage passes to the buyer. The seller must also arrange insurance to cover the buyer's risk of loss or damage to the goods, starting from the port of shipment to at least the port of destination.
When to use: Only used for sea or inland waterway transport. If other types of transport are involved, consider using the CIP Incoterm instead.
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