Understanding the Different Types of Shipping Terms

Shipping terms are an essential part of international trade. They specify the responsibilities of buyers and sellers during shipment, including the point at which ownership and risk transfer from the seller to the buyer. If you’re involved in international trade, it’s crucial to understand the different types of shipping terms to ensure you’re aware of your rights and obligations. In this article, we’ll explain the different types of shipping terms you need to know.

1. EXW (Ex Works) EXW is a term that places the maximum responsibility on the buyer. In an EXW shipment, the seller is only responsible for making the goods available at their premises, and the buyer is responsible for all other costs and risks associated with shipping. This means that the buyer is responsible for arranging and paying for transportation, loading, and unloading of the goods, as well as obtaining all necessary export and import licenses and permits.
2. FCA (Free Carrier) FCA is a term that gives the buyer more responsibility than EXW, but less than other terms such as FOB or CFR. In an FCA shipment, the seller delivers the goods to a carrier nominated by the buyer, and the buyer is responsible for all other costs and risks associated with shipping. This means that the buyer is responsible for arranging and paying for transportation, loading, and unloading of the goods, as well as obtaining all necessary export and import licenses and permits.
3. FOB (Free on Board) FOB is a term that requires the seller to load the goods onto the shipping vessel at the port of shipment. The seller is responsible for all costs and risks associated with loading the goods onto the vessel, but once the goods are on board, the risk transfers to the buyer. This means that the buyer is responsible for all costs and risks associated with transporting the goods from the port of shipment to their final destination, including arranging and paying for transportation, loading, and unloading of the goods, as well as obtaining all necessary export and import licenses and permits.
4. CIF (Cost, Insurance, and Freight) CIF is a term that requires the seller to pay for the cost of the goods, insurance, and freight to bring the goods to the port of destination. Once the goods are loaded onto the shipping vessel, the risk transfers to the buyer. The buyer is responsible for arranging and paying for transportation, unloading the goods, and any additional costs associated with customs clearance and delivery to the final destination.
5. CNF (Cost and Freight): CNF is similar to CIF, but the seller is not responsible for obtaining insurance for the goods. The seller is responsible for paying the cost of the goods and the freight to bring the goods to the port of destination. Once the goods are loaded onto the shipping vessel, the risk transfers to the buyer. The buyer is responsible for arranging and paying for transportation, unloading the goods, and any additional costs associated with customs clearance and delivery to the final destination.
6. CFR (Cost and Freight) – The seller is responsible for paying the cost of the goods and freight to bring the goods to the port of destination, and the buyer is responsible for all costs and risks associated with unloading the goods and delivering them to their final destination, including obtaining necessary export and import licenses and permits.
7. CIP (Carriage and Insurance Paid To) CIP is a term that requires the seller to pay for the cost of transportation and insurance to bring the goods to the port of destination. The buyer is responsible for arranging and paying for unloading the goods and any additional costs associated with customs clearance and delivery to the final destination.
8. DAP (Delivered at Place) DAP is a term that requires the seller to deliver the goods to a specified place of destination. The seller is responsible for all costs and risks associated with transporting the goods to the specified place, including arranging and paying for transportation, loading, and unloading of the goods, as well as obtaining all necessary export and import licenses and permits. The buyer is responsible for all costs associated with receiving the goods at the specified place of destination.
9. DDP (Delivered Duty Paid) DDP is a term that requires the seller to deliver the goods to a specified place of destination and pay for all costs associated with customs clearance and delivery to that destination. The seller is responsible for all costs and risks associated with transporting the goods to the specified place, including arranging and paying for transportation, loading, and unloading of the goods, as well
10. DPU (Delivered at Place Unloaded) – The seller delivers the goods to the buyer at a specified place of destination and is responsible for all costs and risks associated with transporting the goods to that place, including loading and unloading. The buyer is responsible for any additional costs associated with customs clearance and delivery from the specified place to their final destination.