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Trade Terms
Incoterms - 1990
The purpose of Incoterms is to
provide a set of international rules for the interpretation
of the most commonly used trade terms for foreign trade.
Incoterms are published by the International
Chamber of Commerce (ICC).
Under Incoterms 1990 all obligations related
to given trade terms are grouped under 10 headings,
with the obligations of the seller and buyer under each
heading stated and mirrored with respect to the same
subject matter.
| Term |
Description |
Place
of Transfer |
| EXW |
Ex-Works |
(.... named place) |
| FCA |
Free-Carrier |
(.... named place) |
| FAS |
Free Alongside Ship |
(.... named port of
shipment) |
| FOB |
Free On Board |
(.... named port of
shipment) |
| CFR |
Cost & Freight |
(.... named port of
destination) |
| CIF |
Cost, Insurance and
Freight |
(.... named port of
destination) |
| CPT |
Carriage Paid To |
(.... named place of
destination) |
| CIP |
Carriage, Insurance
Paid To |
(.... named place of
destination) |
| DAF |
Delivered At Frontier |
(.... named place) |
| DES |
Delivered Ex-Ship |
(.... named port of
destination) |
| DEQ |
Delivered Ex-Quay |
(.... named port of
destination) |
| DDU |
Delivered Duty Unpaid |
(.... named place of
destination) |
| DDP |
Delivered Duty Paid |
(.... named place of
destination) |
EXW - Ex-Works
Ex-works means that the seller's responsibility to deliver
the goods to the buyer is completed when the seller has
made the goods available to the buyer at the seller's
premises. The seller is not responsible for loading them
on vehicles provided by the buyer or clearing them for
export. The buyer bears the cost and risks in the transport
of the goods from the seller's works to the destination.
This term provides the minimum obligations on a seller.
FCA - Free-Carrier
Free-Carrier means the seller's responsibility is to hand
the goods over to the carrier at the place indicated in
the shipping terms, cleared for export. This can involve
some transportation at the seller's cost from the factory
to the carrier. Sellers may, and commonly do, act as buyers'
agents in arranging transportation at buyers' cost. Used
for any mode of transport (air, sea, rail, truck or multimodal),
the carrier is the transporter, including a freight forwarder,
if the buyer designates a forwarder to receive the goods.
FAS - Free Alongside Ship
Free Alongside Ship means the seller's responsibilities
are completed when the goods have been placed alongside
the ship on the quay or in lighters at the named place
of transfer. The buyer bears all costs and risks of loss
or damage to the goods from that moment. Unlike FCA and
FOB, this term does not require the seller to clear the
goods for export. "Alongside" means within reach of the
carrying ship's tackle. This term should only be used
for ocean or inland water transportation.
FOB - Free On Board
Free On Board means the seller's responsibilities are
completed when the goods, cleared for export, are placed
on board a ship by the seller at the named place of transfer.
The risk of loss or damage to the goods is transferred
from the seller to the buyer when the goods pass the ship's
rail. This term should only be used for ocean or inland
water transportation. If other transportation modes are
used, or if the ship's rail serves no purpose in delineating
the passage of title, such as with container, roll-on/roll-off
cargo, then FCA is the closest equivalent term.
CFR - Cost & Freight
Cost & Freight means the seller must clear the goods
for export and pay the costs and freight necessary to
bring them to the named place of transfer, but the risk
of loss or damage to the goods, and any cost increases,
is transferred to the buyer when the goods pass the ship's
rail in the port of shipment. This term is properly used
only for waterway transportation (sea or inland). If other
modes are used, or if the ship's rail serves no purpose
in delineating the passage of title, such as with container,
roll-on/roll-off cargo, then CPT (Carriage paid to...)
is the closest equivalent term.
CIF - Cost, Insurance and Freight
Cost, Insurance and Freight is similar to the term CFR
(Cost & Freight), but the seller must also procure
marine insurance on the buyer's behalf. The seller contracts
with the insurer and pays the insurance premium, although
the buyer has the risk of loss from the time the goods
pass the ship's rail in the port of shipment. This term
is properly used only for waterway transportation (sea
or inland). CIP (Carriage and insurance paid) is the closest
equivalent term for other transportation modes.
CPT - Carriage Paid To
Carriage Paid To is equivalent to CFR (or C&F) for
transportation other than by ship.
CIP - Carriage, Insurance Paid To
Carriage, Insurance Paid To is equivalent to CIF for transportation
other than by ship.
DAF - Delivered At Frontier
Delivered At Frontier means the seller completes his responsibilities
when the goods, cleared for export, are made available
at the named place. The named place is before the destination
customs border is reached, so the buyer must clear the
goods through his customs. In fact, the frontier can be
the export country's frontier, so it is very important
to specify where the relevant delivery point is. The seller
bears all costs and risks to that point. This term can
be used when goods are shipped by any method, but is designed
for rail or road transport. It is useful when shipping
to a bonded customs warehouse or a free trade zone.
DES - Delivered Ex-Ship
Delivered Ex-Ship means the risks and costs are transferred
on the ship at the named place of destination. Goods are
not cleared for import. This term should only be used
for shipments by sea.
DEQ - Delivered Ex-Quay
Delivered Ex-Quay means the risks and costs are transferred
on the quay at the named place of transfer. Goods must
have been cleared for import, at seller's expense (including
duties and taxes). The seller is also responsible for
discharge costs. This term should only be used for shipments
by sea.
DDU - Delivered Duty Unpaid
Delivered Duty Unpaid means that the seller must handle
everything, to deliver the goods to the named place except
Customs clearance at the country of destination. The buyer
is responsible for payment of duties and taxes.
DDP - Delivered Duty Paid
Delivered Duty Paid means that the seller must handle
everything, including Customs clearance, to deliver the
goods to the named place. Since the named place is usually
the buyer's own place, the seller arranges and pays for
every step of the way. This term provides the maximum
obligations on a seller.
We would be happy to provide advice concerning the correct
usage of Incoterms and the most appropriate term
to suit your particular requirements.
Trade Terms
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