Shipping Terms

1. Ex-Works (EXW)

Ex-works (EXW) means the seller is responsible for making the goods available at their factory or warehouse. Doing this will fulfill the seller's obligation.

After this point, the buyer needs to collect the goods and clear them through customs. The buyer is also responsible for administrative work for the export. Thus, this contract places the minimum obligation on the seller. Meanwhile, the buyer has to bear the cost and risk for international transport, export clearance, insurance, and logistics from the port to destination.

2. Free Carrier (FCA)

Free carrier (FCA) means the seller is responsible for delivering the goods—either to the buyer's carrier or to another party the buyer nominates. Thus, the seller has to pass the cargo through customs and clear it for export. The seller is also responsible for the transport of cargo until the chosen place of delivery.

The two parties should clearly define the obligations of loading and unloading at the delivery address. This will clarify who unloads from the seller's transport and who loads the goods onto the buyer's truck or other equipment. After this exchange, the buyer is responsible for all the costs of transport and bears the risk for any damage to the goods.

3. Free on Board (FOB)

Free on Board (FOB) means the seller is responsible for delivering the cargo to the originating port and loading it onboard. After the loading is complete, the cost and risk of the goods pass from seller to buyer. However, the seller must also arrange for export clearance. Apart from that, everything else is the buyer's obligation. The buyer must bear the cost of freight transport and transportation from the arrival port to destination. Moreover, the buyer must also pay for the bill of lading, insurance, and unloading.

4. Free Alongside Ship (FAS)

Free Alongside Ship (FAS) means the seller is responsible for delivering the goods to the buyer's carriage at the originating port. However, unlike Free on Board, the seller isn't responsible for loading the goads onboard. The rest of the obligations for both buyer and seller are similar to FOB. The seller must arrange to clear the customs for export. The buyer must bear all costs of freight transport and risks of loss or damage to the goods from the originating port till the destination.

5. Cost and Freight (CFR)

Cost and Freight (CFR) means the seller is responsible for delivering the goods to the port of destination. This refers to the port where the buyer resides and will receive the goods. Moreover, the seller must organize and pay for the freight transport of the goods to this port of destination. However, the buyer must bear the cost of insurance and the risk of loss of or damage to the goods. The buyer is then responsible for unloading costs, import haulage, customs clearance, and transportation costs to the destination.

6. Cost, Insurance, and Freight (CIF)

Cost and Freight (CFR) means the seller is responsible for delivering the goods to the port of destination. This refers to the port where the buyer resides and will receive the goods. Moreover, the seller must organize and pay for the freight transport of the goods to this port of destination. However, the buyer must bear the cost of insurance and the risk of loss of or damage to the goods. The buyer is then responsible for unloading costs, import haulage, customs clearance, and transportation costs to the destination.

7. Carriage Paid to (CPT)

When you see Carriage Paid to (CPT), that means the seller is responsible for arranging the carriage that will transport the goods to the destination. The seller must pay for the export clearance and freight costs for the transport to the destination. This destination might be the buyer's facility or the port of destination. However, the risk of loss or damage of goods transfers to the buyer once the seller delivers the goods to the carrier. Thus, the seller isn't obligated by the contract to insure the goods while in transport.

8. Carriage and Insurance Paid to (CIP)

Carriage and Insurance Paid to (CIP) means the seller is responsible for arranging the carriage that will transport the goods to the destination and must also pay for this transport. The risk of loss or damage of goods transfers to the buyer once the seller delivers the goods to the carrier. However, this is different from Carriage Paid to (CPT). Why? Because in CIP, the the seller must pay for the insurance of the cargo while in transit. The seller must also clear the goods for export.

9. Delivered Duty Paid (DDP)

Delivered Duty Paid (DDP) means it's the seller's responsibility to deliver the goods to the pre-decided place in the buyer's country. The seller is responsible for paying for the international freight transport of the goods to this destination. The seller is also responsible for clearing the exports at departure as well as passing the imports at the arrival port. This means the seller is responsible for clearing the customs in the buyer's country. Moreover, the seller also pays the import duties and taxes. The seller also bears the risk for the goods throughout this process until the buyer receives them for unloading. Thus, Delivered Duty Paid (DDP) places maximum obligations on the seller and minimum obligations on the buyer.

10. Delivered at Place (DAP)

Delivered at Place (DAP) means that the seller is responsible for organizing and delivering the goods at a pre-decided place. It was formerly known as delivered duty unpaid (DDU). This is because, unlike in Delivered Duty Paid (DDP), the buyer is responsible for arranging the custom clearance and paying for import duties and local taxes. However, the seller still has to pay for the international transport and has to clear the cargo for exports. The seller also bears the risk of loss or damage of goods until the goods are available for unloading at the destination.

11. Delivered at Place Unloaded (DPU)

Delivered at Place Unloaded (DPU) means the seller is responsible for delivering the goods and unloading them at the pre-decided port or place of destination. The place of destination could be a port, an inland terminal, a freight interchange, an airport, or a forwarder’s warehouse. Unlike DAP and DDP, where it was enough to make the goods available for unloading, DPU requires the seller to unload the goods in order to complete delivery. However, similar to DAP and DDP, DPU requires the seller to clear the goods for export and bear all risks and costs associated with transporting the goods to the place of destination. The buyer is responsible for clearing the goods for import and paying the duties and taxes.