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Ocean Shipping Glossary

EXW – Ex Works (named place) The seller makes the goods available at his premises. The buyer is
responsible for all charges.
This trade term places the greatest responsibility on the buyer and minimum obligations on the seller. The
Ex Works term is often used when making an initial quotation for the sale of goods without any costs
included.
EXW means that a seller has the goods ready for collection at his premises (Works, factory, warehouse,
plant) on the date agreed upon.
The buyer pays all transportation costs and also bears the risks for bringing the goods to their final
destination


FCA – Free Carrier (named places) The seller hands over the goods, cleared for export, into the custody
of the first carrier (named by the buyer) at the named place. This term is suitable for all modes of transport,
including carriage by air, rail, road, and containerised / multi-modal sea transport. This is the correct "freight
collect" term to use for sea shipments in containers, whether LCL (less than container load) or FCL (full
container load).

FAS – Free Alongside Ship (named loading port) The seller must place the goods alongside the ship at
the named port. The seller must clear the goods for export. Suitable only for maritime transport only but
NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). This term is
typically used for heavy-lift or bulk cargo.

FOB – Free on board (named loading port) The seller must themself load the goods on board the ship
nominated by the buyer, cost and risk being divided at ship's rail. The seller must clear the goods for export.
Maritime transport only but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC
publication 715). The buyer must instruct the seller the details of the vessel and port where the goods are
to be loaded, and there is no reference to, or provision for, the use of a carrier or forwarder. It does not
include Air transport. This term has been greatly misused over the last three decades ever since Incoterms
1980 explained that FCA should be used for container shipments.


CFR or CNF – Cost and Freight (named destination port) Seller must pay the costs and freight to bring
the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed
the ship's rail. Maritime transport only and Insurance for the goods is NOT included. Insurance is at the Cost
of the Buyer.

CIF – Cost, Insurance and Freight (named destination port) Exactly the same as CFR except that the
seller must in addition procure and pay for insurance for the buyer. Maritime transport only.

CPT – Carriage Paid To (named place of destination) The general/containerised/multimodal equivalent of
CFR. The seller pays for carriage to the named point of destination, but risk passes when the goods are
handed over to the first carrier.

CIP – Carriage and Insurance Paid (To) (named place of destination) The containerised
transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination
point, but risk passes when the goods are handed over to the first carrier.

CFR or CNF – Cost and Freight (named destination port) Seller must pay the costs and freight to bring
the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed
the ship's rail. Maritime transport only and Insurance for the goods is NOT included. Insurance is at the Cost
of the Buyer.

CIF – Cost, Insurance and Freight (named destination port) Exactly the same as CFR except that the
seller must in addition procure and pay for insurance for the buyer. Maritime transport only.

CPT – Carriage Paid To (named place of destination) The general/containerised/multimodal equivalent of
CFR. The seller pays for carriage to the named point of destination, but risk passes when the goods are
handed over to the first carrier.

CIP – Carriage and Insurance Paid (To) (named place of destination) The containerised
transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination
point, but risk passes when the goods are handed over to the first carrier

DAF – Delivered At Frontier (Deliveplace) This term can be used when the goods are transported by rail and
road. The seller pays for transportation to the named place of delivery at the frontier. The buyer arranges
for customs clearance and pays for transportation from the frontier to his factory. The passing of risk occurs
at the frontier.

DES – Delivered Ex Ship (named port) Where goods are delivered ex ship, the passing of risk does not
occur until the ship has arrived at the named port of destination and the goods made available for
unloading to the buyer. The seller pays the same freight and insurance costs as he would under a CIF
arrangement. Unlike CFR and CIF terms, the seller has agreed to bear not just cost, but also Risk and Title
up to the arrival of the vessel at the named port. Costs for unloading the goods and any duties, taxes, etc…
are for the Buyer. A commonly used term in shipping bulk commodities, such as coal, grain, dry chemicals - -
- and where the seller either owns or has chartered, their own vessel.

DEQ – Delivered Ex Quay (named port) This is similar to DES, but the passing of risk does not occur until the
goods have been unloaded at the port of destination.

DDU – Delivered Duty Unpaid (named destination place) This term means that the seller delivers the goods
to the buyer to the named place of destination in the contract of sale. The goods are not cleared for import
or unloaded from any form of transport at the place of destination. The buyer is responsible for the costs
and risks for the unloading, duty and any subsequent delivery beyond the place of destination. However, if
the buyer wishes the seller to bear cost and risks associated with the import clearance, duty, unloading and
subsequent delivery beyond the place of destination, then this all needs to be explicitly agreed upon in the
contract of sale.

DAP - Delivered At Place (named destination place) This term means that 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. This is exactly what the old Incoterm DDU stipulated.

DDP – Delivered Duty Paid (named destination place) This term means that the seller pays for all
transportation costs and bears all risk until the goods have been delivered and pays the duty. Also used
interchangeably with the term "Free Domicile". The most comprehensive term for the buyer. In most of the
importing countries, taxes such as (but not limited to) VAT and excises should not be considered prepaid
being handled as a "refundable" tax. Therefore VAT and excises usually are not representing a direct cost
for the importer since they will be recovered against the sales on the local (domestic) market.


New arrival incoterms have been discussed in the Incoterms 2010 brought out by the ICC and DAT and
DAP have replaced DAF,DES,DEQ and DDU Given here is a small explanation provided by the ICC Two new
Incoterms rules – DAT and DAP – have replaced the Incoterms 2000 rules DAF, DES, DEQ and DDU

The number of Incoterms® rules has been reduced from 13 to 11. This has been achieved by substituting
two new rules that may be used irrespective of the agreed mode of transport – DAT, Delivered at Terminal,
and DAP, Delivered at Place – for the Incoterms® 2000 rules DAF, DES, DEQ and DDU.

Under both new rules, delivery occurs at a named destination: in DAT, at the buyer’s disposal unloaded
from the arriving vehicle (as under the former DEQ rule); in DAP, likewise at the buyer’s disposal, but ready
for unloading (as under the former DAF, DES and DDU rules).

The new rules make the Incoterms® 2000 rules DES and DEQ superfluous. The named terminal in DAT may
well be in a port, and DAT can therefore safely be used in cases where the Incoterms® 2000 rule DEQ once
was. Likewise, the arriving “vehicle” under DAP may well be a ship and the named place of destination may
well be a port: consequently, DAP can safely be used in cases where the Incoterms® 2000 rule DES once
was. These new rules, like their predecessors, are “delivered”, with the seller bearing all the costs (other
than those related to import clearance, where applicable) and risks involved in bringing the goods to the
named place of destination

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