International Freight Terms

International trade can be complex, but our guide to Incoterms (trade terms issued by the International Chamber of Commerce) simplifies the roles and responsibilities of buyers and sellers in the movement of goods. Gain insights into Incoterms 2020, which play a pivotal role in international trade agreements.

Incoterms 2020

Incoterms, commonly referenced as trade terms are a set of guidelines that assist in international trade, issued by the International Chamber of Commerce. The Incoterms clarify and guide the buying and selling parties to the responsibilities of their roles in the movement of goods from the seller to the buyer.

EXW - Ex Works

Under the EXW term, the seller is responsible for making the goods available at their premises. The parties can also agree on another named place such as factory or office. At this point, the buyer takes ownership of the goods as well as handling all costs and risks after the products are collected.

FCA - Free Carrier

The seller is responsible for delivering the goods to the buyer’s nominated or onto the buyer’s transportation. The seller also organizes the shipping, including export clearance and meeting security requirements. The risk is transferred once the goods are loaded onto the buyer’s transportation. Thus, any damage to the products when on board the vessel is the responsibility of the buyer. The buyer pays the cost of freight, bill of lading fees and insurance, including the unloading and transportation costs to the final destination.

CPT - Carriage paid to

The seller bears the costs of transportation to the buyer’s place of destination. The seller clears the goods for export and delivers them to the carrier or place of destination as instructed by the buyer at the defined place of shipment is where the risk is transferred to the buyer. The seller also is responsible for the transportation costs associated with delivering goods. However, the seller is not responsible for insurance

CIP - Carriage and Insurance paid to

The seller is required to insure the goods in transit and to pay for the transportation itself. The seller clears the goods for export and delivers them to the carrier or place of destination as instructed by the buyer. The seller is responsible for the transportation costs of the items to the designated place of destination. The risk is transferred to the buyer at the defined place of shipment.

DAP - Delivered at place

The seller delivers the goods to a named place of destination but is not responsible for unloading. The seller is responsible for packing, export clearance, carriage expenses and any terminal costs up to the agreed destination point. DAP means the buyer is responsible for all costs, duties and taxes associated with unloading the goods.

DPU - Delivered at place unloaded

The seller covers all the costs of transportation (export fees and carriage). Also, at the destination port, the seller pays the unloading from the carrier and the port charges and assumes all the risk until the goods are unloaded at the agreed location. It is suggested that the agreement between the seller and the buyer be as specific as possible, as there is confusion between the old incoterm DAT (Delivered at Terminal).

DDP - Delivered Duty Paid

DDP means the seller bears all risks and costs associated with delivering the goods to the buyer's designated place, customs cleared, delivered and ready for unloading. The seller is liable for clearing the goods through customs in the buyer’s country which includes both duties and taxes. This term places the maximum obligations on the seller and minimum obligations on the buyer. The buyer bears no risk or responsibility until the goods are at the final agreed place.

Incoterms 2020 Point of Delivery and Transfer of Risk

Incoterms specifically for Sea

Note: that this is only guidance and people should seek full instruction from their dedicated shipping agent / The International Chamber of Commerce.

FAS - Free Alongside Ship

The seller delivers the goods alongside the buyer’s vessel at the named port of shipment. It means that the buyer bears all costs and risks of loss or damage from that point onward.

FOB - Free on Board

The seller bears costs and risks until the goods are loaded onboard of the designated vessel as well as arranging export documentation and clearance. At the same time, the buyer pays the cost of marine freight, bill of lading fees and insurance and is responsible for unloading and local transportation costs from the port of arrival to the final destination.

CFR - Cost and Freight

The seller pays for the carriage of the goods up to the named port of destination. The risk is transferred to the buyer at the country of export, specifically when the goods have been loaded onboard the ship. The shipper pays for export clearance and freight costs to the selected port however the buyer is responsible for the insurance of the goods from the arrival onto the ship at the port of departure.

CIF - Cost Insurance and Freight

Similar to CFR, however, the seller must also obtain and pay for the marine insurance against the buyer’s risk of loss or damage to the goods during carriage. Note that the exporter is only required to obtain insurance for minimum coverage.

Get a Quote

To discuss how RPC Logistics may be able to assist with your Managing Warehousing (3PL) requirements, please fill out the form and we will respond to your enquiry promptly.

"*" indicates required fields

Key Contact Details

PHONE
09 63 444 63

EMAIL
Transport: transport@rpcnz.co.nz
Warehousing: warehouse@rpcnz.co.nz
Administration: office@rpcnz.co.nz
Sales: sales@rpcnz.co.nz

FAX
Admin: 09 634 0331
Operations: 09 634 4566
After Hours: 09 638 4280