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Incoterms (International Commercial Terms) are recognized internationally as standard trade terms used in sales contracts.
Incoterms are used to make sure that both the buyer and seller understand and agree to:
· The party that is responsible for the charges of transporting the goods, including insurance, local taxes and duties
· The location that the goods should be picked up from and transported to
· The party that is responsible for the goods during each step of the transportation process
EXW – Ex Works (named place of delivery)
The Seller confirms that the freight is available at their premises. The Ex Works term is used when quoting for the sale of goods without any transport charges included. The buyer is then responsible to arrange collection of the freight from the seller’s premises and arrange transport through to end destination at their own expense. This includes the buyer arranging the export documentation and the customs clearance (if applicable).
FCA - Free Carrier (named place of delivery)
Delivery of the freight to the carriers or nominated agents named location is the responsibility of the seller. The seller also arranges for the export customs clearance, if applicable. All other charges are for the buyer.
FAS – Free Alongside Ship (named port of shipment)
This incoterm must only be used for sea freight. The buyer nominates the vessel and port of departure in order for the shipper to arrange delivery of the goods accordingly. The buyer then bears all responsibility and transportation charges from that moment onwards. The export customs clearance is arranged by the shipper unless an agreement is in place between the shipper and the buyer confirming that the buyer arranges the export customs clearance themselves.
FOB – Free on Board (named port of shipment)
The buyer is responsible for the sea freight charges from either the port of departure or the receiving depot or terminal. The buyer confirms the export booking details to the shipper who in turn arranges for the freight to be delivered to the port of departure or receiving depot or terminal. The domestic transport charges, terminal handling charges, and customs clearance is the sole responsibility of the seller.
CFR – Cost and Freight (named port of destination)
The seller is contracted to arrange for the goods to be shipped from their own warehouse to the destination port or terminal. The freight charges are for the account of the seller. This does not include any insurance coverage for the goods, therefore risk is passed on to the buyer from the moment the goods are loaded onto the vessel at the port of departure.
CIF – Cost, Insurance and Freight (named port of destination)
The seller is contracted to arrange for the goods to be shipped from their own warehouse to the destination port or terminal. The freight charges are for the account of the seller. The seller must also arrange for the goods to be insured from the moment the goods are about to be loaded at their warehouse through to the destination port or terminal.
CPT – Carriage Paid To (named place of destination)
The seller arranges and pays the transportation costs, normally through to port of destination. The seller accepts and is responsible for any origin costs including export customs clearance and freight costs for transportation. The seller is not responsible for arranging any insurance and for delivery of the freight to its ultimate destination (buyer’s premises).
CIP – Carriage and Insurance Paid to (named place of destination)
The seller is responsible for all transportation charges as well as arranging insurance coverage from the seller’s premises through to named port of destination. With regards to the insurance placing, risk passes when the freight is handed over to the first carrier. For intermodal deliveries, CIP is used.
DAT – Delivered at Terminal (named terminal at port or place of destination)
The seller is responsible for all transport charges such as export charges, freight, insurance, and destination port arrival charges up to arrival destination port or terminal. Risk is passed to the buyer once the goods have cleared customs at port of destination or destination terminal.
DAP – Delivered at Place (named place of destination
The seller is responsible for all transport charges through to named place of destination such as export charges, freight, insurance, destination port arrival charges, and end delivery charges. The buyer is responsible for arranging the import customs clearance at country of destination and any applicable duties or taxes payable.
DDP – Delivered Duty Paid (named place of destination)
All transportation and insurance charges from the sellers warehouse through to the buyers named place of destination is for the account of the seller. This includes the seller bearing responsibility for arranging the import customs clearance at the country of destination and paying any applicable duties and taxes. Risk is transferred once the goods arrive at the buyers named place of destination ready to be unloaded by the buyer.
Visual Media Partnership LLP
1-11 Mersey View
Brighton Le Sands
Tel No: 0151 281 8178