Learn More About Types of Shipping from Speedy Air Cargo

The below definitions explain the differences between shipping methods. Contact Speedy Air Cargo if you need any more information regarding types of shipping.


Definitions

Ex Works (EXW)


Ex Works (EXW)

Ex work means that the seller fulfills its obligation to deliver when it has made the goods available at its premises (i.e., works, factory, warehouse, etc.) to the buyer. The seller is not responsible for loading the goods on the vehicle provided by the buyer. Unless otherwise agreed, the seller is not responsible for clearing the goods for export. Ex works represents the minimum obligation for the seller. Ex works should not be used when the buyer cannot carry out, directly or indirectly, the export formalities. In such circumstances, use the free carrier (FCA) term.

Free Carrier (FCA)


Free Carrier (FCA)

Free carrier means the seller fulfills its obligation to deliver when it has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place. If no precise point is indicated by the buyer, the seller may choose within the place or range stipulated where the carrier shall take the goods into its charge. When the seller’s assistance is required in making the contract with the carrier (rail, air, etc.), the seller may act at the buyer’s risk and expense. Free carrier may be used for any mode of transport, including multimodal transport.


Free On Board (FOB)


Free On Board (FOB)

Free on board means the seller fulfills its obligation to deliver when the goods have passed over the ship’s rail at the named port of shipment. The buyer has to bear all costs and risks of loss of or damage to the goods from that point. Free on board requires the seller to clear the goods for export. Free on board can only be used for sea or inland waterway transport and in the case of roll-on/roll-off or container traffic, the ship’s rail serves no practical purpose.

Cost and Freight (CFR)


Cost and Freight (CFR)

Cost and freight means the seller must pay the costs and freight necessary to bring the goods to the named port of destination. The risk of loss or of damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer when the goods pass the ship’s rail in the port of shipment. If the buyer does not insure the shipment and if the goods are damaged, you may run the risk of not being paid. Cost and freight requires the seller to clear the goods for export.


Cost and freight can only be used for sea or inland waterway transport. In the case of roll-on/roll-off or container traffic, the ship’s rail serves no practical purpose.

Cost, Insurance and Freight (CIF)


Cost, Insurance and Freight (CIF)

Cost, insurance and freight means the seller has the same obligations as under CFR and the seller also has to procure marine insurance against the buyer’s risk of loss of or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. The seller is only required to obtain insurance on minimum coverage. Cost, insurance and freight require the seller to clear the goods for export. Cost, insurance and freight can only be used for sea or inland waterway transport.

Carriage Paid To (CPT)


Carriage Paid To (CPT)

Carriage paid to means the seller pays the freight for the carriage of the goods to the named destination. The risk of loss or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier, is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier. If the buyer does not insure the shipment and if the goods are damaged, you may run the risk of not being paid. A carrier is any person who, in a contract of carriage, undertakes to perform or to procure the performance of carriage, by rail, road, sea, air, inland waterway or by a combination of such modes.

Delivery Duty Unpaid (DDU)


Delivery Duty Unpaid (DDU)

Delivered duty unpaid means the seller fulfills its obligation when the goods arrive by any means of transportation to the named place of destination. The seller has to bear the costs and risks involved in bringing the goods thereto (excluding duties, taxes and other official charges payable upon importation) as well as the costs and risks of carrying out customs formalities. The buyer pays the duty. The buyer has to pay any additional costs and to bear any risks caused by its failure to clear the goods for import in time. If the parties wish the seller to carry out customs formalities and bear the costs and risks, or pay any taxes, this has to be made clear by adding words to this effect. Delivered duty unpaid can be used for all modes of transport.

Delivery Duty Paid (DDP)


Delivery Duty Paid (DDP)

Delivered duty paid means the seller fulfills its obligation when the goods arrive by any means of transportation to the named place of destination. The seller has to bear the costs and risks involved in bringing the goods thereto (including duties, taxes and other official charges payable upon importation) as well as the costs and risks of carrying out customs formalities. The seller pays the duty. Delivered duty paid represents the seller’s maximum obligation. The buyer has to pay any additional costs and to bear any risks caused by its failure to clear the goods for import in time. Delivered duty paid should not be used if the seller is unable to obtain an import licence. If the parties wish the seller not to carry out customs formalities and bear the costs and risks, or not pay any taxes, this has to be made clear by adding words to this effect. Delivered duty paid can be used for all modes of transport.


These definitions were taken from the Pierobon.org.

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