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International Commercial Terms

Your shipping document contains a variety of acronyms – or International Commercial Terms (INCOTERMS) – used to specify which party is responsible for cargo, and which party is responsibility for paying various costs. These terms were developed and defined by the International Chamber of Commerce.  When they are included in the sales agreement, they commit the buyer and seller to a strict interpretation of these standard definitions.

Rules for any mode or modes of transport:

EXW   “Ex Works”

The seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.). The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable.

FCA     “Free Carrier”

The seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place. FCA requires the seller to clear the goods for export, where applicable.

CPT     “Carriage Paid To”

The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties) and the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

CIP      “Carriage and Insurance Paid To”

The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties) and the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination. The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during carriage.

DAT    “Delivered at Terminal”

The seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. DAT requires the seller to clear the goods for export, where applicable.

DAP    “Delivered at Place”

The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. DAP requires the seller to clear the goods for export, where applicable.

DDP    “Delivered Duty Paid”

The seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.

Rules for Sea and Inland Waterway Transport:

FAS     “Free Alongside Ship”

The seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment. FAS requires the seller to clear the goods for export, where applicable.

FOB    “Free On Board”

The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. FOB requires the seller to clear the goods for export, where applicable.

CFR     "Cost and Freight”

The seller delivers the goods on board the vessel or procures the goods already so delivered. The seller must contract for any pay the costs and freight necessary to bring the goods to the named port of destination.

CIF      “Cost Insurance and Freight”

The seller delivers the goods on board the vessel or procures the goods already so delivered. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during carriage.

Contact our International Trade team at 888.461.1864 or international@nationalpenn.com.

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