FORWARDERS POLICIES INCOTERMS SHIPPING INFORMATION  
 
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INCOTERM RESPONSIBILITIES
 
 
When negotiating an international sales contract, both parties need to pay as much attention to the terms of sale as to the sales price. To make it as clear as possible, an international set of trade terms (INCOTERMS) has been adopted by most countries that defines exactly the responsibilities and risks of both the buyer and seller including while the merchandise is in transit.

The following charts summarize the responsibilities of both the buyer and seller for each of the current 13 INCOTERMS.
 

Obligations under the EXW term (B - Buyer)
 
Inland freight in Shipper's country; delivery to the carrier or frontier
B
Export customs clearance
B
Payment of customs charges and taxes in Shipper's country
B
Loading to the main carrier and port charges
B
Main carriage/freight
B
Cargo (marine) insurance
B
Unloading from the main carrier and port charges
B
Customs clearance in Buyer's country
B
Payment of customs duties and taxes in Buyer's country
B
Inland freight in Buyer's country
B
Other costs and risks in Buyer's country
B
 
When EXW is used, you should remember that:
  • The export of the goods is NOT guaranteed and the buyer may, for example, keep the goods in Australia and/or re-sell it to a third party.
  • The actual point of manufacture might well vary from the place where you operate your commercial undertaking.
 
Obligations under the F Terms (S – Seller, B – Buyer)
 

 

FCA

FAS

FOB

Inland freight in Shipper's country; delivery to the carrier or frontier

S

S

S

Export customs clearance

S

S

S

Payment of customs charges and taxes in Shipper's country

S

S

S

Loading to the main carrier and port charges

S

B

S

Main carriage/freight

B

B

B

Cargo (marine) insurance

B

B

B

Unloading from the main carrier and port charges

B

B

B

Customs clearance in Buyer's country

B

B

B

Payment of customs duties and taxes in Buyer's country

B

B

B

Inland freight in Buyer's country

B

B

B

Other costs and risks in Buyer's country

B

B

B

 
When the F Terms are used, you should remember that:
  • FAS and FOB are mono-modal terms and can only be used when the main carriage is by sea freight (see Modes of Transportation). The term “FOB Shenzhen”, meaning the delivery of the goods on board the plane, is incorrect.
  • Under FOB you are responsible for handling, loading, stowage and other port charges, while under FCA, these charges are for the buyer's account.
* There are actually two FCA terms: FCA Seller's Premises where the seller is responsible only for loading the goods and not responsible for inland freight; and FCA Named Place (International Carrier) where the seller is responsible for inland freight.
 
 
Obligations under the C Terms (S – Seller, B – Buyer)
 

 

CFR

CIF

CPT

CIP

Inland freight in Shipper's country; delivery to the carrier or frontier

S

S

S

S

Export customs clearance

S

S

S

S

Payment of customs charges and taxes in Shipper's country

S

S

S

S

Loading to the main carrier and port charges

S

S

S

S

Main carriage/freight

S

S

S

S

Cargo (marine) insurance

B

S

B

S

Unloading from the main carrier and port charges

S

S

S

S

Customs clearance in Buyer's country

B

B

B

B

Payment of customs duties and taxes in Buyer's country

B

B

B

B

Inland freight in Buyer's country

B

B

S

S

Other costs and risks in Buyer's country

B

B

B

B

 
CFR and CIF are mono-modal terms and can only be used when the main carriage is by sea freight. It is a common mistake when, under these terms, the place located in a middle of continent is named as a port of destination. Terms “CFR Cape Town” and/or “CIF Mumbai” are incorrect terms.

CIF and CIP are the only two terms, under which you are compulsorily responsible for insurance. Under all other terms, the buyer considers insurance as an optional responsibility.
 

Obligations under the D Terms* (S – Seller, B – Buyer)
 

 

DES

DEQ

DDU

DDP

Inland freight in Shipper's country; delivery to the carrier or frontier

S

S

S

S

Export customs clearance

S

S

S

S

Payment of customs charges and taxes in Shipper's country

S

S

S

S

Loading to the main carrier and port charges

S

S

S

S

Main carriage/freight

S

S

S

S

Cargo (marine) insurance

B

B

S

S

Unloading from the main carrier and port charges

B

S

S

S

Customs clearance in Buyer's country

B

S

B

S

Payment of customs duties and taxes in Buyer's country

B

S

B

S

Inland freight in Buyer's country

B

B

S

S

Other costs and risks in Buyer's country

B

B

S

S

 
DES and DEQ are mono-modal terms and can only be used when the main carriage is by sea freight.
 

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