International Commercial Terms (INCOTERMS)
1. (EXW) Ex Works, Ex Warehouse (Delivery at the named workplace)
The seller company is deemed to have fulfilled its delivery obligation by making the goods available to the buyer company at the specified workplace (factory, warehouse, workshop, etc.). All expenses and risks after delivery belong to the buyer company. In other words, unless there is a provision to the contrary, the seller does not have to load the goods into the vehicle provided by the buyer company or carry out customs procedures. All expenses and risks related to picking up the goods from the seller's establishment and taking them to the desired location belong to the buyer company. This delivery method involves minimum liability for the seller.
2. (FCA) Free Carrier (Delivery to the carrier, at the named place)
It can be used for any transportation method, including multiple transportation stages. The seller company fulfills its obligation by delivering the goods, whose export formalities have been completed, to the carrier named by the buyer company, at the place named by the buyer company. Freight, risk and all expenses belong to the buyer company.
If a specific point for delivery is not specified by the buyer company, then the seller company can choose the point where it will hand over the goods to the carrier within a previously determined area or place.
This term can be used for any transport operation, including multi-modal ones. Other obligations are as for FOB delivery.
3. (FAS) Free Alongside Ship (Delivery alongside the ship at the named loading port)
It is used only in sea transportation. The seller company is deemed to have fulfilled its delivery obligation by keeping the goods ready at the loading port named by the buyer company, next to the ship named by the buyer company and at the time specified by the buyer company. Freight, risks and all expenses after this place and time belong to the buyer company.
4. (FOB) Free On Board (Delivery on board at the named port of shipment)
It is used only in sea transportation. The seller company is deemed to have fulfilled its obligation to deliver the goods at the port of shipment named by the buyer company, at the time specified by the buyer company and once they pass over the rail of the ship named by the buyer company. Freight, risk and all expenses after this place and time belong to the buyer company.The seller company must notify the buyer company with all the details that the goods have been loaded. The responsibility of the buyer company is to conclude a transportation contract for transportation from the specified loading port, at its own expense, and from the moment the goods are delivered on the ship; undertakes any loss or damage to the goods during the period until the goods reach their destination.
5. (CFR) Cost and Freight (Delivered freight prepaid at the named port of destination)
It is used only in sea transportation. The goods are delivered to the buyer company at the port of destination, with a transportation contract made and freight paid by the seller company. The risk of the goods belongs to the buyer company once they pass over the ship's rail at the loading port.
6. (CIF) Cost Insurance and Freight (Delivery at the named port of destination, freight and insurance premium paid.)
It is used only in sea transportation. The seller's responsibility ends on the deck of the ship. The difference from CFR is that the Insurance Premium belongs to the seller company. But this insurance covers minimum risks. Depending on the situation, if the buyer wants to cover special risks, the buyer must include these issues in the contract with the seller. The insured value must be 10% more than the contract amount.
7. (CPT) Carriage Paid To (Delivered freight prepaid to the named destination.)
It can be used for any transportation method, including multiple transportation stages. The seller company delivers the goods to the buyer company at the destination, with freight paid, to the named delivery location. If more than one carrier is used to the specified delivery location, the risk passes from the seller company to the buyer company when the goods are delivered to the first carrier.After the goods are transferred to the carrier, the risk of loss and damage to the goods, as well as all additional expenses caused by events that may occur after this delivery, are transferred from the seller company to the buyer company.The seller company will forward the necessary information to the buyer company for the purpose of insuring the goods. The responsibility of the buyer company is to obtain the necessary import permit or authorization documents at its own expense.CFR is used in sea, CPT is used in land and other modes of transportation.
8. (CIP) Carriage and Insurance Paid To (Delivery, freight and insurance premium paid, to the named destination)
It can be used for any transportation method, including multiple transportation stages. In addition to its obligations under the CPT term, the seller undertakes to obtain cargo insurance for transportation and pay the premium.The term transportation and insurance paid delivery refers to the situation where the seller company bears the same obligations as the CF term, but in addition, it is obliged to provide cargo insurance to the buyer company against the risk of loss and/or damage during the transportation of the goods. The seller concludes the insurance contract and pays the insurance premium. Other responsibilities of the buyer company are as in the case of CF delivery.CIF is used in sea transportation, and CIP is used in land and other transportation.
9. (DAF) Delivered at Frontier (Delivery at the border, at the named place)
The seller company is deemed to have fulfilled its delivery obligation by making the goods available to the buyer company at the named place at the border, but before the customs of the neighboring country, with the export formalities completed. The expression 'border' can be used for the border of any country, including the export country. For this reason, it is of great importance to clearly state which border is meant by giving the place name. It is primarily used for transportation by Rail and Road. Freight from the specified location at the border belongs to the buyer company. The seller has no obligation to provide transportation costs and insurance from the border.
10. (DES) Delivered Ex Ship (Delivery on board at the named port of destination)
It is used only in sea transportation. The seller company fulfills its delivery obligation when it makes the goods available to the buyer company at the named port of destination, on the board of the ship, before customs clearance. All risks and expenses up to this point belong to the seller.
11. (DEQ) Delivered Ex Quay (Delivery at the dock with Customs Duty paid at the named port of destination)
The term delivery at the dock is used only if the delivery will be unloaded from the ship to the dock at the port of arrival in sea transportation or multi-vehicle transportation.The seller company's obligation ends when the goods are made available to the buyer company on the dock. The seller undertakes all risks and expenses, including taxes, duties and other fees, related to the transportation of the goods to that point. Additional words are written next to the DEQ term to indicate who will be responsible for clearing the goods from customs. For example; In DEQ duty paid, taxes and customs clearance costs are the responsibility of the exporter company, and in DEQ duty unpaid, these expenses are the responsibility of the importer company.
12. (DDU) Delivered Duty Unpaid (Delivery without payment of customs duty at the named destination)
According to this term, which can be used for any mode of transportation, the seller company fulfills its delivery obligation by making the goods available to the buyer company at a named place in the import country. Until that point, the seller company assumes all risks and costs and the costs and risks related to finalizing customs formalities, excluding taxes, duties and other official expenses during actual importation. It is the delivery of the goods to the specified place in the buyer's country, with taxes unpaid.This type of delivery is used in land, railway and air transportation, excluding sea.
13. (DDP) Delivered Duty Paid (Delivery duty prepaid at the named destination)
According to this term, which can be used for any mode of transportation, the seller company fulfills its delivery obligation by keeping the goods customs-cleared and ready at the disposal of the buyer company at a named place in the import country. Until that point, the seller assumes all risks and costs. It is the delivery of the goods, taxes paid, to the specified location in the buyer's country.The seller has to undertake the risks and expenses, including taxes, duties and other fees required for transportation of the goods to that point and passing them through import customs. While the EXW term brings less obligation to the seller, the DDP term, on the contrary, brings more obligations.
ABBREVIATIONS PUT BEHIND SOME TERMS:
STOWED : Stacked, FOB Stowed : Stacking costs belong to the seller.
FO : Free Out: Excluding unloading costs.
FIO : Free in and out : Excluding loading and unloading costs.
FIOS : Free in and out and stowed : Excluding loading, stacking and unloading costs.
FIOT : Free in and out and trimmed : Loading, balancing and stacking of loads and unloading costs are excluded.
LANDED : Landed, unloading costs are included in the freight.
