The Incoterm’s rules are an essential part of the daily language of trade. They have been incorporated in contracts for the sale of goods worldwide and provide rules and guidance to importers, exporters, lawyers, transporters, and insurers.
WHICH INCOTERMS ARE MOSTLY USED IN AIR FREIGHT FORWARDING?
EXW (Ex Works) – the buyer arranges the full shipment, from the supplier’s warehouse to the cargo’s ultimate destination. The buyer has responsibility for the full transportation process.
FCA (Free Carrier) – the seller arranges most or all of the export country stages (customs, trucking to the airport). The buyer arranges all other stages to the cargo’s ultimate destination.
FOB (Free on Board) – the seller completes all export formalities and delivers the goods on board at his own cost. Once on board, all liability and expenses transfer to the buyer.
CPT (Carriage Paid To) – the seller is responsible for all the steps in their country, or as far as the buyer’s forwarder’s warehouse. The seller is also responsible for booking main carriage to a terminal or warehouse in the buyer’s country. Liability of the seller ends after goods arrive to the buyer’s country.
CIF (Cost, Insurance and Freight) – this incoterm works exactly like CPT, excepting the seller is also responsible for arranging main carriage insurance.
CFR (Cost and Freight) – the seller is liable and responsible for all the steps in their country up to the point the goods are loaded on board the vessel and is also responsible – but not liable – for the main carriage.
DAP (Delivered At Place) – the seller arranges the entire shipment, except import customs.
DDP (Delivered Duty Paid) – the seller arranges the entire shipment, including import customs.