Below short codes summary within industry full descriptions also below:
|Free on board||FOB|
|Cost and freight||CFR|
|Cost, insurance and freight||CIF|
|Carriage and insurance paid||CIP|
|Delivered duty unpaid||DDU|
|Delivered duty paid||DDP|
|Free alongside ship||FAS|
|Delivered at frontier||DAF|
A list of less frequently encountered Incoterms is set out below
Free alongside ship (FAS)
The buyer must clear the goods for export and be responsible for arranging for them to be loaded on board the vessel.
Delivered ex-ship (DES)
The seller has responsibility until the goods are ready for unloading at the port of destination.
Delivered ex-quay (duty paid) (DEQ)
The seller has responsibility until the goods are unloaded on to the quay and (usually) for customs clearance.
Delivered at frontier (DAF)
This is a multimodal term
Full Description of Incotems
Ex works (EWX)
Under this Incoterm, the seller must pack and place the goods at the disposal of the buyer at the time provided for in the contract at a named delivery point within his works or factory. The seller is not, however, responsible for loading the goods and if he does so will do so as agent of the buyer. The buyer is responsible for the entire cost of transporting the goods which are at his risk from the moment they are made available by the seller, and is also responsible for all export formalities. Provision is now made for an invoice provided by the seller by EDI methods in this and other Incoterms.
Free carrier (FCA)
This Incoterm should be selected in place of FOB when through road transport is employed (including RO/RO) or where multimodal container operations are used on a door-to-door basis rather than port-to-port. It is also now recommended usage for rail replacing FOR/FOT and for air replacing FOA. In fact, FCA can be used for any mode of transport. Under the 'free carrier' Incoterm, the seller must hand the goods over to the carrier named by the buyer cleared for export at the time and at the place stipulated by the buyer. This might well be a carrier's inland consolidation depot or terminal and the term 'carrier' will include freight forwarder if such person has been nominated by the buyer for the receipt of the goods. It is the seller's duty to give the buyer sufficient notice when he has handed the goods over to the carrier. He must also obtain any necessary export licence. The seller retains the risk in the goods until they have been handed over to the named carrier in accordance with the buyer's instructions. In case of road transport, the seller will remain on risk where goods are collected from it's premises until they have been loaded safely onto the road vehicle.
Free on board (FOB)
Under this Incoterm, the seller must pack and deliver the goods on board a vessel named by the buyer cleared for export at the port named in the contract of sale at the stipulated time. The seller must also give the buyer sufficient notice that the goods are safely on board. The seller retains the risk in the goods until they pass the ship's rail, whereupon the risk passes to the buyer. The seller must obtain any necessary export licence. This term in only appropriate for conventional maritime transport, not RO/RO or intermodal container movements.
Cost and freight (CFR)
Under this Incoterm, the seller must pack the goods (where necessary) and arrange and pay for the goods to be export cleared and carried by ship to a named port of destination and unloaded at that destination. He must also obtain any necessary export licence. The goods must be loaded within the period stipulated by the buyer and the seller must give the buyer sufficient notice that the goods are safely on board. The seller retains the risk in the goods until they pass the ship's rail, whereupon risk passes to the buyer. It is the seller's duty to obtain for the buyer the usual transport document for the agreed port of destination. This may be a clean negotiable bill of lading or a non-negotiable sea waybill and here, as now elsewhere in Incoterms, such transport document can be communicated to the buyer by EDI. This term is only appropriate for conventional maritime transport, not RO/RO or intermodal container movements.
Cost, insurance and freight (CIF)
This Incoterm is identical in most particulars with CFR and the same comments apply, including its applicability only to conventional maritime transport. In addition to the CFR responsibilities, the seller under CIF must obtain in transferable form a marine insurance policy to cover risks of transit with insurers of repute. The policy must cover the CIF price plus 10 per cent and where possible be in the currency of the contract. Note that only very basic cover is required equivalent to the Institute 'C' clauses and buyers should normally insist on an 'al-risk' type of policy such as that under the Institute 'A' clauses. This term is only appropriate for conventional maritime transport, not RO/RO or international container movements.
Carriage paid (CPT)
This Incoterm should be selected in place of CFR when through road transport is employed (including RO/RO) or in the case of multimodal transport. It can be used optionally for any mode of transport. Under this Incoterm, the seller must arrange and pay for the transport of the goods cleared for export to the point agreed as the destination. The seller must give the buyer sufficient notice when the goods have been handed over to the first carrier in the chain. He must also obtain any necessary export licence. The seller retains the risk in the goods until they have been handed over to the first carrier, whereupon the risk passes to the buyer. The buyer is responsible for customs duties at the destination.
Carriage and insurance paid (CIP)
This Incoterm should be selected in place of CIF when through road transport is employed (including RO/RO) or in case of multimodal transport. It can be used optionally for any mode of transport. It is identical in most particulars with 'Carriage paid to...' In addition to his CPT (formally DCP) obligations, the seller must obtain transport insurance upon which the buyer must be entitled to claim with insurers of repute. The cover used to have to be adequate taking account of custom of the trade, the type of goods and other circumstances. However, the insurance requirements have now been aligned on the more restrictive conditions of CIF where only minimum cover need be provided. Shippers of non-bulk commodities should be aware that this minimum cover is not adequate for manufactured goods and that consideration should be given to requesting the seller to provide 'A' clauses cover or equivalent.
Delivered duty unpaid (DDU)
This new Incoterm can be used irrespective of the mode of transport. The seller bears risk and expense of getting the goods to a named destination, but excluding duties, taxes and other official charges payable on import. Some variations on DDU are possible if the seller is to pay some of the import charges, for example 'delivered duty unpaid VAT paid...'. The seller must give the buyer sufficient notice of the despatch of the goods so that the latter can arrange to clear them on importation.
Delivered duty paid (DDP)
This Incoterm can be used irrespective of the mode, or principal mode of transport employed. It stands at the other end of the spectrum from ex works. In this case, the seller bears all the expense of getting the goods to a named point of destination and also bears all the risk until the goods are placed at the disposal of the buyer. In particular, the seller must arrange and pay for transport of the goods so that they will be available at the destination on the date agreed with the buyer. He must see that the buyer receives documents which will enable him to take delivery of the goods. He must obtain both export and import licences where necessary and pay all import duties and charges at the named place of destination. He must notify the buyer when the goods are placed in the hands of the first carrier in the chain, in sufficient time so that the buyer can be ready to take delivery.