The basic shipping terms – INCO terms

When dealing with suppliers you will come across a few different shipping and freight terms these very depending on what you are wanting to do and achieve.

 

The most common terms are INCO (international commerce terminology)

Allocations of costs to buyer/seller according to Incoterms 2010

Incoterm 2010 Export customs declaration Carriage to port of export Unloading of truck in port of export Loading on vessel in port of export Carriage (Sea/Air) to port of import Insurance Unloading in port of import Loading on truck in port of import Carriage to place of destination Import customs clearance Import taxes
EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
FCA Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
FAS Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
FOB Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer
CPT Seller Seller Seller Seller Seller Buyer Seller Buyer/Seller Seller Buyer Buyer
CFR(CNF) Seller Seller Seller Seller Seller Buyer Buyer/Seller Buyer Buyer Buyer Buyer
CIF Seller Seller Seller Seller Seller Seller Buyer/Seller Buyer Buyer Buyer Buyer
CIP Seller Seller Seller Seller Seller Seller Seller Buyer/Seller Seller Buyer Buyer
DAT Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer
DAP Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer
DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

 

EXW -Ex works.
this is the least risk for the supplier. The buyer pays for all costs from pickup at the suppliers warehouse all the way through to delivery to your own doorstep. All the seller needs to do is make sure the stock is ready for pickup and that they are correct documents are ready for shipment. The buyer handles and pays for everything.

FOB – free on board.
The supplier will arrange shipping to the local port. From there the buyer them pays the shipping costs and delivery to their own doorstep.

CFR – cost and freight.
The supply will range shipping to the local port of the Seller i.e. the country. The buyer then needs to arrange pickup from the local port to there doorstep. This also include customs clearance if necessary.

CIF – cost, insurance and freight.
Similar to the CFR however the Seller will also pay for insurance

DAT – delivery at terminal.
The supplier will range shipping to the local port of the Seller i.e. the country. The customs clearance and documents fees are sometimes paid for as well. The buyer then needs to arrange transportation from the local portal or terminal to the doorstep.

DAP – delivery at place.
The supplier will range shipping to the local port of the Seller i.e. the country. The customs clearance and documents fees are sometimes paid for as well. The goods are then delivered to the buyers doorstep.

DDP – delivered duty paid.
The supplier arranges for shipping for customs clearance and duties as well. The suppliers in complete control of the ship from end to end.

 

Is very important to know exactly how the goods are being sent. The reason for this is you may be liable for additional customs clearance fees or in the case of damage to the item you may be responsible for having insurance.

Some of the options also mean you lose control over the shipping process which may result in higher costs.

 

 

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