Get familiar with all Incoterms and Container Specifications
Incoterms were issued by the International Chamber of Commerce are a daily language in the logistics world, they state which party is liable for each stage of a logistics transaction and ultimately who pays what. If you are a first time importer or exporter, it is vital and in your best interest to understand and be up to date with global Incoterms and what they mean.
The world is now a global market and billions of dollars are spent in trade each year, it’s important that you choose the correct Incoterms when selling or buying internationally. For example; if you are purchasing goods “CFR” from overseas, you are likely to pay a lot higher local charges upon arrival at the port of destination. However, if you utilise an experienced Freight Forwarder like Across the Ocean Shipping, we would advise you to bring it in on a “FOB” basis which will then give you control of shipping and local charges, thereby saving you dollars, time and stress as your local Across the Ocean Shipping office would control these factors, not an overseas freight forwarder who isn’t directly invested in your import.
From the moment the cargo leaves the seller’s premises, all responsibility is that of the buyer. The buyer takes ownership and full risk, they are responsible for all payments concerning transportation and insurances. The EXW can be used for all modes of transportation.
FCA (Free Carrier)
When goods are cleared for export the FCA term is applied when the seller is required to load the cargo on the buyer’s receiving shipping carrier. All responsibility is passed on to the buyer once the goods are loaded onto the receiving vessel. At this point, the buyer is responsible for all costs and insurances.
CPT (Carriage Paid To)
If the seller seeks the services of third party provider to assist with the transportation of the cargo the seller is responsible for arranging the carriage and payment of all associated costs.
CIP (Carriage and Insurance Paid To)
If the seller seeks the services of third party provider to assist with the transportation of the cargo the seller is responsible for arranging the carriage and payment of all associated costs. The seller is also required to provide minimum insurance cover of the cargo during transportation. The seller is only required to provide the most basic insurance cover it is the responsibility of the buyers to arrange more premium cover if required.
DAT (Delivered At Terminal)
When the seller is responsible for delivery and unloading of the cargo at an agreed destination “terminal”. The destination terminal as specified by the buyer could be any location or site, such an air cargo carrier, courtyard, warehouse, road side etc. It is the seller who bears all risks for loss or damage of the cargo until the goods are unloaded at the terminal.
DAP (Delivered At Place)
Delivered At Place is when the seller bears all risk of transporting the shipment to the a specific destination that has been arranged between the buyer and seller. The buyer becomes responsible once the cargo has arrived at the destination. The buyer is responsible for all unloading of the goods at the place of delivery.
DDP (Delivered Duty Paid)
Delivered Duty Paid, the seller is responsible for arranging all modes of transport and customs clearance requirements, including the fee’s associated, for both export and import. The seller bears all risk and costs concerned with delivery of the cargo to the agreed destination place.
The buyer may nominate cargo to be transported “Alongside Ship”, maybe on a barge for example, at the port of shipment. From the moment the goods are alongside the ship, all responsibility for loss and/or damage to the goods rest with the buyer.
FOB (Free On Board)
Similar to that of the Free Alongside Ship, Free On Board is used when the buyer is loading the cargo onto a vessel. From the moment the goods are loaded onto the ship, the buyer is responsible for all costs, insurances and for receiving the cargo.
CFR (Cost and Freight)
Cost and Freight is used when the seller is responsible for loading the goods onto the vessel for shipping and has paid all transportation costs. The buyer becomes responsible for the any loss or damage and also for any insurance costs from the moment the cargo is loaded onto the ship by the seller.
CIF (Cost, Insurance and Freight)
Cost Insurance and Freight is used when the seller is responsible for loading the goods onto the vessel for shipping, all transportation fees and arranging insurance cover for the cargo. From the moment the good are loaded onto the ship at the port the buyer becomes responsible for any loss or damage to the cargo. It is important to understand that the buyer is only obliged to arrange the minimum insurance policy for the cargo. The buyer may wish their cargo to be covered with a more premium insurance policy, this should be agreed with the seller prior to the loading of the goods on the vessel or a separate insurance policy should be obtained by the buyer.
DES (Delivered Ex Ship)
DES (Delivered Ex Ship). Expired on the 1st January 2011 and was replaced by DAP or DAT. Delivered Ex Ship (DES) is when the seller delivers non-cleared goods to the buyer who is aboard the ship with the cargo aboard a the delivery port
DAF (Delivered At Frontier)
DAF (Delivered At Frontier). Expired on the 1st January 2011 and was replaced by DAP or DAT. Commonly associated with Road and Rail transport of cargo, DAF is used when the seller delivers cleared goods to border and responsibility to passed to buyer prior to the goods passing through customs.
DEQ (Delivered Ex Quay)
DEQ (Delivered Ex Quay). Expired on the 1st January 2011 and was replaced by DAP or DAT. When the seller has delivered the shipment to the buyer a the quay, or loading jetty, at the agreed destination post. The goods are have already been cleared through customs.
DDU (Delivered Duty Unpaid)
DDU (Delivered Duty Unpaid). Expired on the 1st January 2011 and was replaced by DAP or DAT. The seller is obligated to deliver the goods at the agreed location within the country that is importing the cargo. The buyer is responsible for paying all associated fees associated with clearance of the goods.