Views: 0 Author: Site Editor Publish Time: 2022-04-01 Origin: Site
General Conditions of Interpretation of Freight Terms (International Commercial Terms) are standard contractual terms used in import/export sales contracts to define responsibilities and obligations for the carriage of goods. In plain English - the supplier will ensure how far the goods will go in transit and at what point the buyer takes over the shipment process.
There are currently 11 Incoterms in use. Some apply to all modes of transport, others to specific ones. The following are the 11 rules briefly explained.
▪ EXW (Ex Works): This means that the seller delivers the goods at a specified location (usually the seller's factory). The buyer is responsible for the onward transportation of the goods and bears the cost of the same.
DAP (Delivery in Place): The seller is responsible for the delivery of the goods to the named place.
FOB (Free on Board): The seller completes delivery when the goods are loaded onto the buyer's designated ship at the designated port. Therefore, once the goods are "on board", the seller is "free" to assume responsibility. Thereafter, responsibility for any damage or loss passes to the buyer. This rule applies to goods transported by sea or river.
FCA (Free Carrier): The seller delivers the goods to a carrier or buyer's designated agent at the seller's premises or other designated place.
▪ FAS (free with ship): The seller delivers the goods alongside the ship (for example, on a barge or dock). The buyer must load the goods onto the ship. This rule applies only to ocean freight.
CFR (Cost and Freight): The seller delivers the goods by ship at the named port and pays the cost and freight of bringing the goods to the port.
▪ CIF (Cost, Insurance and Freight): The seller delivers the goods on board a ship at the named port and pays the cost of transporting the goods to the port, freight and insurance.
▪ CPT (Carriage Paid To): The seller delivers the goods to the named place and pays for the transportation to that place.
CIP (Carriage and Insurance Paid To): The seller delivers the goods to the named place and pays for the carriage and insurance of the goods to that place.
▪ DPU (Delivery at Place of Unloading): The seller delivers the goods at the named place and unloads them, assuming the risks and costs of both. This is the only rule that requires the seller to unload the goods to complete the delivery. Buyer is responsible for any import clearance charges, taxes and duties.
DDP (Delivered Duty Paid): The seller assumes maximum responsibility for arranging transportation and delivery of the goods at the designated location and pays import clearance and any duties and taxes that may apply.
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