Do you know these 13 trade terms of freight forwarding?
Source: admin Time: 2022-11-02
The basic terms of freight forwarding are EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAF, DES, DEQ, DDU, DDP.
In these 13 trade terms, from left to right, the seller's obligations become greater and greater, while the buyer's obligations are the opposite. That is to say, among the above trade terms, the seller bears the least responsibility under the EXW term, while the seller bears the greatest responsibility under the DDP term.
EXW Ex Works
It means that delivery is completed when the seller hands over the goods to the buyer at its location or other designated place (such as a workshop, factory or warehouse). The seller does not go through export customs clearance procedures or load the goods onto any means of transport.
This term is the one that places the least liability on the seller.
FCA Free Carrier
It means that the seller has completed the delivery as long as he delivers the goods to the carrier designated by the buyer at the designated location and completes the export customs clearance procedures.
It should be noted that the choice of place of delivery will affect the obligations for loading and unloading at that place. This term can be used for all modes of transport, including multimodal transport.
FAS Free Alongside Ship
It means that the seller delivers the goods to the ship at the designated port of shipment, and the buyer must bear all risks of loss or damage to the goods from that time on.
FOB term
It refers to the name of goods + quantity of goods + unit price + FOB + port of shipment. Risk transfer is when the goods cross the ship's rail. Since the goods have not crossed the ship's rail, the liability should be borne by the seller's company.
If the boom breaks during the lifting process and the cement falls onto the ship's deck instead of into the sea, the risk is transferred to the buyer and the responsibility should be borne by the buyer's company.
CFR Cost and Freight
It means that the seller completes delivery when the goods cross the ship's rail at the port of shipment, and the seller must pay the freight and expenses required to transport the goods to the designated port of destination.
However, after delivery, the risk of loss or damage to the goods, as well as any additional costs caused by various events, are transferred from the seller to the buyer.
This term is only applicable to sea or inland waterway transport. If the parties do not intend to deliver the goods over the ship's rail, the CPT term should be used.
CIF Cost, Insurance and Freight
It means that the seller has completed delivery when the goods cross the ship's rail at the port of shipment. This term only applies to sea and inland waterway transportation.
If the parties do not intend to deliver the goods across the ship's rail, the CIP term should be used.
CPT Carriage Paid To (named place of destination)
It means that the seller delivers the goods to the carrier designated by him (Free Carrier), but the seller must also pay the freight to transport the goods to the destination. That is, the buyer bears all risks and other expenses after delivery.
CIP freight and insurance
It means that the seller delivers the goods to the international freight forwarder designated by it, but the seller must also pay the freight to transport the goods to the destination, which means that the buyer bears all risks and additional costs after the seller delivers the goods.
The term can apply to all modes of transport, including multimodal transport.
DAF Delivered at Frontier
It means that when the seller delivers the goods that are still on the delivery vehicle and have not yet been unloaded to the buyer at the designated location and specific delivery point at the border, before the customs border of the adjacent country, and completes the export customs clearance procedures for the goods but has not yet completed the import customs clearance procedures, the delivery is completed.
DES Free on Board
It means that at the designated port of destination, the goods are handed over to the buyer on board the ship, but the seller completes delivery without going through import customs clearance procedures.
This term can be used only when the goods are loaded on board a vessel at the port of destination by sea or inland waterway transport or by multimodal transport.
DEQ Delivered at Destination Terminal
It means that the seller has completed the delivery as long as he delivers the goods to the carrier designated by the buyer at the designated location and completes the export customs clearance procedures.
It should be noted that the choice of place of delivery will affect the obligations for loading and unloading at that place. This term can be used for all modes of transport, including multimodal transport.
DDU Delivered Duty Unpaid
It means that the seller delivers the goods to the buyer at the designated destination without going through import formalities or unloading the goods from the means of transport.
This term applies to all modes of transport, but when the goods are delivered on board the ship or at the terminal at the port of destination, the DES or DEQ term should be used.
DDP Delivered Duty Paid
It means that the seller completes the import customs clearance procedures at the designated destination and delivers the goods that have not yet been unloaded from the delivery vehicle to the buyer, thus completing the delivery.
Because the seller bears the greatest responsibility under the DDP term, this term should not be used if the seller cannot obtain an import license directly or indirectly; if the parties want the buyer to bear the risks and costs of importing, the DDU term should be used.
This term applies to all modes of transport, but when the goods are delivered on board the ship or at the terminal at the port of destination, the DES or DEQ term should be used.
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