The following are the basic terms of delivery, as interpreted by INCOTERMS-2000.
1. Franko Zavod (… place name).
EXW – Ex Works (… named place).
This term means that the seller has fulfilled his obligations to deliver the goods when he made them available to the buyer at his place or in another named place (for example, in a factory, factory, warehouse, etc.). The seller is not responsible for loading the goods on the vehicle, as well as for customs clearance of the goods for export. This term cannot be applied when the buyer is unable to perform the export formalities, directly or indirectly. The buyer bears all costs and risks in connection with the transportation of the goods from the seller’s business to the place of destination. This condition provides for the minimum obligations fulfilled by the seller.
2. Franco carrier (… place name).
FCA – Free Carrier (… named place).
The term means that the seller will deliver the goods that have passed customs clearance to the carrier specified by the buyer to the named place. The choice of delivery location will affect loading and unloading obligations. If the delivery takes place at the seller’s premises, the seller is responsible for the shipment. If the delivery is made elsewhere, the seller is not responsible for the shipment of the goods. This term can be used for transportation by any mode of transport.
“Carrier” means any person who, under a contract of carriage, performs or arranges for the carriage of goods by rail, road, sea, air, inland waterway or a combination of these modes of transport.
3. Franco along the side of the vessel (… the name of the port of shipment).
FAS – Free Alongside Ship (… named port of shipment).
Under this basic condition, the seller is deemed to have delivered when the goods are placed along the side of the vessel at berth or on lighters at the specified port of shipment. From that point onwards, all costs and risks of loss or damage to the goods shall be borne by the buyer. Under the terms of the term, the seller is obliged to clear the goods for export. The condition may apply only when transporting goods by sea or inland waterway.
4. Franco bort (… the name of the port of shipment).
FOB – Free On Board (… named port of shipment).
The term means that the seller has delivered when the goods have passed through the handrails of the vessel at the named port of shipment. From that point onwards, all costs and risks of loss or damage to the goods shall be borne by the buyer. Under the terms of the term, the seller is obliged to clear the goods for export. This condition may only apply to maritime or inland waterway transport.
5. Cost and freight (… The name of the destination port.
CFR – Cost and Freight (… named port of destination).
The term means that the seller has delivered when the goods have passed through the handrails of the vessel at the port of shipment. He must also pay the costs and freight necessary to deliver the goods to the said port of destination, however, the risk of loss of or damage to the goods, as well as any additional costs arising after the shipment of the goods, pass from the seller to the buyer. Under the terms of the term, the seller is obliged to clear the goods for export. Applicable only for the transportation of goods by sea or inland waterway.
6. Cost, insurance and freight (… the name of the destination port).
CIF – Cost, Insurance and Freight (… named port of destination).
The term means that the seller has delivered when the goods have passed through the handrails of the vessel at the port of shipment. The seller is obliged to pay the costs and freight necessary to deliver the goods to the specified port of destination, but the risk of loss or damage to the goods, as well as any additional costs arising after the shipment of the goods, pass from the seller to the buyer. The seller is also obliged to purchase marine insurance in favor of the buyer against the risk of loss and damage to the goods during transportation (conclusion of an insurance contract with minimal coverage, payment of insurance premiums), as well as customs clearance of goods for export. This condition may only apply to maritime or inland waterway transport.
7. Freight/shipping paid until (… the name of the destination).
CPT – Carriage paid to (… named place of destination).
The term means that the seller will deliver the goods to the carrier named by him. In addition, the seller is obliged to pay the costs associated with the transportation of the goods to the named destination. The buyer assumes all risks of loss or damage to the goods and other costs after the transfer of the goods to the carrier. The seller is obliged to clean the goods for export. The term is applicable to the carriage of goods by any mode of transport, including multimodal transport.
8. Freight/shipping and insurance paid up to (… the name of the destination).
CIP – Carriage and Insurance Paid to (… named place of destination).
The term means that the seller will deliver the goods to the carrier named by him. In addition, the seller is obliged to pay the costs associated with the transportation of the goods to the named destination. The buyer assumes all risks and any additional costs for the delivery of the goods. Under the terms of the term, the seller is also obliged to provide insurance against the risks of loss and damage to the goods during transportation in favor of the buyer (conclusion of an insurance contract with minimal coverage, payment of insurance premiums) and the obligation to clear the goods for export. In the case of carriage to a point of destination by several carriers, the transfer of risk will occur at the time the goods are placed in the custody of the first carrier. This condition applies to all modes of transport, including multimodal transport.
9. Delivery to the border (… name of the place of delivery).
DAF – Delivered At Frontier (… named place).
The term means that the seller has made a delivery when he has provided unloaded goods that have passed customs clearance for export, but not yet for import on the arriving vehicle at the buyer’s disposal at the said point or place at the border before the goods arrive at the customs border of the neighboring country. The term “border” refers to any border, including the border of the country of export. This term can be used when transporting goods by any means of transport, when the goods are delivered to the land border.
10. Delivery from the vessel (… the name of the destination port).
DES – Delivered Ex Ship (… named port of destination).
This term means that the seller has made a delivery when it has made the goods that have not been cleared for import to the buyer on board the vessel at the named port of destination. The seller must bear all costs and risks for the delivery of the goods to the named port of destination until they are unloaded. This term can be used for carriage by sea or inland waterway, in multimodal transport, when the goods arrive at the port of destination by ship.
11. Delivery from the pier (… the name of the destination port).
DEQ – Delivered Ex Quay (… named port of destination).
The term means that the seller has fulfilled his delivery obligations when the goods that have not been cleared for import are placed at the disposal of the buyer at the pier at the named port of destination. The seller is obliged to bear all costs and risks associated with the transportation and unloading of goods to the pier. The term imposes on the buyer the obligation of customs clearance for the import of goods, as well as the payment of taxes, duties and other duties on imports. This term can be used only for carriage by sea or inland waterway transport, in multimodal transport, when goods are unloaded from the vessel to the pier at the port of destination.
12. Duty-free delivery (… the name of the destination).
DDU — Delivered Duty Unpaid (… named place of destination).
The term means that the seller will place the goods that have not been cleared and unloaded from the arriving vehicle at the buyer’s disposal at the said destination. The seller is obliged to bear all costs and risks associated with transporting the goods to this place, except (if necessary) any fees collected for import in the country of destination. The buyer shall be liable for such charges, as well as for other costs and risks arising from the fact that he was unable to clear customs in time for imports. Responsibility, risks and costs for unloading and transshipment of goods depend on whose control the selected place of delivery is located. This term can be used regardless of the mode of transport.
13. Delivery with payment of duty (… the name of the destination).
DDP – Delivered Duty Paid (… named place of destination).
The term means that the seller will place the goods cleared and unloaded from the arriving vehicle at the buyer’s disposal at the named destination. The seller is obliged to bear all costs and risks associated with the transportation of the goods, including (where required) any fees for import into the country of destination. The term implies the maximum obligations of the seller. This term cannot be used if the seller is directly or indirectly unable to obtain an import license. The term can be used regardless of the mode of transport.
Of all the basic conditions discussed above, the terms FOB and CIF are the most common. In the practice of international trade, the “FOB price” is usually understood as the export price of a commodity, the “CIF price” as the import price.