EX WORKS

The term Ex Works places the greatest responsibility with the buyer, while the seller has minimum obligations.

The seller has the goods ready for collection at the agreed place of delivery, which is commonly the seller’s factory, mill, plant or warehouse. The buyer is held accountable for all subsequent costs and risk, starting with loading the goods onto a truck or other transport vehicle at the seller’s premises.

In practice, it is not uncommon that the seller loads the goods onto the vehicle at the risk and cost of the buyer or even free of charge. Such an agreement must be made within the contract of sales.

The EXW term should not be used if the buyer cannot handle the export formalities. In these instances, use FCA instead.

The buyer covers all costs from seller’s door to final destination.

Seller’s Obligations EXW Incoterm – Obligations

  • Goods, commercial invoice and documentation

  • Export packaging and marking

Buyer’s Obligations

  • Loading at seller’s location

  • Export licenses and customs formalities

  • Pre-carriage to terminal

  • Loading charges

  • Main carriage

  • Discharge and onward carriage

  • Import formalities and duties

  • Cost of pre-shipment inspection

FREE CARRIER

In Free Carrier, the seller is responsible for export clearance and delivery of the goods to the carrier at the named place of delivery.

If the named place of delivery is the seller’s place of business, the seller is responsible for loading the goods. If the named place is the carrier’s premises, the seller is not responsible for unloading.

A carrier is any person or company who undertakes the carriage, such as a shipping line, airline, trucking company, railway or freight forwarder.

The buyer is to clearly specify the precise point of delivery in the contract of sales or carriage.

FCA Shipping Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation

  • Export packaging and marking

  • Export licenses and customs formalities

  • Pre-carriage to terminal

  • Delivery to named place of delivery

  • Proof of delivery

Buyer’s Obligations

  • Unloading from arriving means of transportation

  • Loading charges

  • Main carriage

  • Discharge and onward carriage

  • Import formalities and duties

  • Cost of pre-shipment inspection

FREE ALONGSIDE SHIP

In Free Alongside Ship, the goods are cleared for export by the seller and placed alongside the vessel at the named port of departure. The location can be a loading dock or a barge.

The buyer is responsible for loading the freight onto the vessel, local carriage, discharge, import formalities and duties and onward carriage to the final destination.

FAS applies to ocean or inland waterway transport only and is popular with bulk cargo, such as oil or grain.

For containerized shipments which are delivered only to the terminal, the term FCA should be used.

Seller pays all expenses until the freight is loaded onto the vessel, then buyer takes over.

FAS Incoterm Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation

  • Export packaging and marking

  • Export licenses and customs formalities

  • Pre-carriage to terminal

  • Delivery alongside vessel at port of shipment

  • Proof of delivery

Buyer’s Obligations

  • Loading charges

  • Main carriage

  • Discharge and onward carriage

  • Import formalities and duties

  • Cost of pre-shipment inspection

FREE ON BOARD

Free on Board requires the seller to clear the goods for export and deliver them loaded on board the vessel at the named port of departure.

The buyer takes over risk and costs starting from the time the goods have been loaded. In addition, the buyer is responsible for import clearance and duties.

Under the rules, FOB is only used for ocean or inland waterway transport. The named place is always a port. It does not apply if the main carriage is via ground or rail.

The term is commonly used for bulk cargo (such as oil or grain) or freight coming out of Asia.

Seller pays all costs up to the main carriage, buyer pays all costs starting with the main carriage.

Free on Board Incoterm Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation

  • Export packaging and marking

  • Export licenses and customs formalities

  • Pre-carriage and delivery

  • Loading charges

  • Delivery onboard vessel at named port of shipment

  • Proof of delivery

Buyer’s Obligations

  • Main carriage

  • Discharge and onward carriage

  • Import formalities and duties

  • Cost of pre-shipment inspection

COST AND FREIGHT

Cost and Freight requires the seller to clear the goods for export, deliver them onboard the ship at the port of departure and pay for the transport of the goods to the named port of destination. The risk passes from seller to buyer when the goods are delivered onboard the ship.

The buyer is responsible for paying all additional transport costs from the port of destination as well as import clearance and duties.

CFR is used for ocean or inland waterway transport only.

If the freight is containerized and delivered only to the terminal, the use of CPT is recommended.

The transfer of risk from seller to buyer occurs at a different point than the transfer of cost.

CFR Shipping Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation

  • Export packaging and marking

  • Export licenses and customs formalities

  • Pre-carriage and delivery

  • Loading charges

  • Delivery at named port of destination

  • Proof of delivery

Buyer’s Obligations

  • Risk starting onboard ship

  • Discharge and onward carriage

  • Import formalities and duties

  • Cost of pre-shipment inspection

COST, INSURANCE AND FREIGHT

In Cost, Insurance and Freight, the seller is responsible for delivering the goods onboard the vessel at the port of shipment – not port of destination. In addition, the seller is paying for the transport and minimum insurance coverage to the named port of destination.

The buyer assumes all risk once the goods are onboard the vessel for the main carriage, but does not assume costs until the freight arrives at the named port of destination.

CIF applies to ocean or inland waterway transport only. It is commonly used for bulk cargo, oversized or overweight shipments.

If the freight is containerized and delivered only to the terminal, the use of CIP is recommended.

The seller is obligated to secure insurance for the buyer, but only for minimum coverage.

CIF Incoterm Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation

  • Export packaging and marking

  • Export licenses and customs formalities

  • Pre-carriage and delivery

  • Loading charges

  • Delivery at named port of destination

  • Proof of delivery

  • Insurance

Buyer’s Obligations

  • Risk starting onboard ship

  • Discharge and onward carriage

  • Import formalities and duties

  • Cost of pre-shipment inspection

CARRIAGE PAID TO

Carriage Paid To requires the seller to clear the goods, deliver them to the carrier and pay for the carrier to the named place of destination, but the seller’s risk ends with delivery to the carrier. Insurance is not required from the seller.

The buyer’s risk begins when the carrier receives the goods from the seller. However, the buyer is only responsible for additional costs after the goods arrive at the final destination.

The term CPT is often used in air freight, containerized ocean freight, small parcel shipments and “ro-ro” shipments of motor vehicles.

A carrier is any person or company who undertakes the carriage, such as a shipping line, airline, trucking company, railway or freight forwarder.

The transfer of risk from seller to buyer occurs at a different point than the transfer of cost.

CIF Incoterm Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation

  • Export packaging and marking

  • Export licenses and customs formalities

  • Pre-carriage and delivery

  • Loading charges

  • Delivery at named place of destination

  • Proof of delivery

Buyer’s Obligations

  • Risk starting at port of shipment

  • Import formalities and duties

  • Cost of pre-shipment inspection

CARRIAGE AND INSURANCE PAID TO

In Carriage and Insurance Paid To, the seller assumes all risk until the goods are delivered to the carrier at the place of shipment – not place of destination. Once the goods are delivered to the carrier, the buyer is responsible for all risks.

However, the seller is still responsible for the cost of carriage and minimum insurance coverage until the freight reaches the named place of destination.

A carrier is any person or company who undertakes the carriage, such as a shipping line, airline, trucking company, railway or freight forwarder.

In multimodal shipments, the place of shipment is the first carrier used.

Same as CPT, but the seller is obligated to secure minimum insurance coverage.

CIP Incoterm Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation

  • Export packaging and marking

  • Export licenses and customs formalities

  • Pre-carriage and delivery

  • Loading charges

  • Delivery at named place of destination

  • Proof of delivery

  • Insurance

Buyer’s Obligations

  • Risk starting at port of shipment

  • Import formalities and duties

  • Cost of pre-shipment inspection

DELIVERED AT TERMINAL

Delivered At Terminal refers to the seller delivering the goods, once unloaded from the arriving means of transport. Goods are placed at the disposal of the buyer at the named terminal, at the named port or place of destination.

DAT is used irrespective of the mode of transport selected and may also be used where more than one mode of transport is utilized. The specific point within the terminal at the place of destination should clearly be specified as agreed upon.

DAT requires the seller to clear goods for export, where applicable, without any obligation to clear the goods for import, pay import duty or carry out import customs formalities.

It is important to clearly specify the precise point at or within the terminal where the goods will be unloaded.

DAT Incoterm Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation

  • Export packaging and marking

  • Export licenses and customs formalities

  • Pre-carriage and delivery

  • Loading charges

  • Main carriage

  • Delivery at named terminal at port or place of destination

  • Proof of delivery

Buyer’s Obligations

  • Onward carriage

  • Import formalities and duties

  • Cost of pre-shipment inspection

  • Delivery to buyer

DELIVERED AT PLACE

Delivered At Place means the seller delivers, when the goods are placed at the disposal of the buyer, on the arriving means of transport, ready for unloading at the named place of destination. The seller assumes all risks involved in bringing the goods to the named place.

DAP is used irrespective of the mode of transport selected and may also be used where more than one mode of transport is utilized. The point within the agreed place of destination should be specified as clearly agreed upon. The risk to this point belongs to the seller.

If the seller incurs costs under the obtained contract of carriage related to unloading at the place of destination, the seller is not entitled to recover such costs from the buyer, unless otherwise agreed between both parties.

DAP requires the seller to clear goods for export, where applicable, without any obligation to clear the goods for import, pay import duty or carry out import customs formalities.

Clearly specify the precise point of delivery at or within the named place of destination.

DAP Shipping Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation

  • Export packaging and marking

  • Export licenses and customs formalities

  • Pre-carriage and delivery

  • Loading charges

  • Main carriage

  • Delivery to place of destination

  • Proof of delivery

Buyer’s Obligations

  • Unloading from arriving means of transportation

  • Import formalities and duties

  • Cost of pre-shipment inspection

  • Delivery to buyer

DELIVERED DUTY PAID

With Delivered Duty Paid, the seller assumes all responsibilities and costs for delivering the goods to the named place of destination. The seller must pay both export and import formalities, fees, duties and taxes.

The buyer is free of any risk or cost until the goods are unloaded from the vehicle at the named place of destination which is usually the buyer’s place of business.

The seller is responsible for all costs and risk until the goods are unloaded.

DDP Incoterm Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation

  • Export packaging and marking

  • Export licenses and customs formalities

  • Pre-carriage and delivery

  • Loading charges

  • Main carriage

  • Proof of delivery

  • Import formalities and duties

  • Cost of all inspections

  • Delivery to named place of destination/buyer