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EXW means the seller’s responsibility is the minimum. The seller will keep the goods ready at his factory, office, warehouse, or any location. After that, everything is the responsibility of the buyer. The buyer has to arrange transportation, loading, export clearance, freight, insurance, and delivery at his own cost and risk. Seller is not responsible after goods are ready for pickup. This is the most buyer-responsible term. Mostly used when the buyer has full control of logistics or has his own agents in the seller’s country.
→ Buyer from Dubai picks goods from Indore Factory.
→ USA Buyer collects machinery from Mumbai warehouse.
FCA means the seller will deliver goods to a location agreed by the buyer like a warehouse, port, or transporter’s facility. The seller handles packaging, loading at his place, and delivering goods to the transport company selected by the buyer. After delivery, risk transfers to the buyer. The buyer arranges shipping, customs clearance, and other further costs. FCA is very flexible because delivery can happen anywhere as agreed between buyer and seller. This is better than EXW because the seller helps till the transport facility.
→ Seller delivers at ICD Pithampur for buyer.
→ Seller hands over goods at Air Cargo Terminal, Delhi.
FAS means the seller’s responsibility is till the goods are kept near or beside the ship at the export port. Loading on the ship and further arrangements like sea freight, insurance, import customs, and delivery are handled by the buyer. It is mostly used in bulk shipments like raw materials, coal, grains, etc. Seller bears the cost of moving goods to the port and placing them alongside the vessel.
→ Seller keeps goods near the vessel at Mundra Port.
→ Cargo placed alongside ship at Chennai Port.
FOB is one of the most popular terms in sea shipping. Here, the seller’s responsibility is to load goods on the ship at the export port. Once goods are loaded on the ship, the risk is transferred to the buyer. The seller arranges packaging, transportation to port, export customs clearance, and loading on ship. After that, the buyer pays for freight, insurance, and import duties.
→ Seller loads goods at Mumbai Port on buyer’s ship.
→ Seller arranges loading at Kolkata Port.
CFR means the seller’s responsibility increases. Seller will not only load goods on the ship but will also pay for ocean freight till the destination port. However, the risk passes to the buyer after goods are loaded on the ship. The buyer is responsible for insurance and local handling at the destination.
→ Seller books freight till Jebel Ali Port, Dubai.
→ Seller pays shipping cost till Port Klang, Malaysia.
CIF is an extended version of CFR. Seller will load goods on the ship, pay ocean freight till buyer’s port, and also arrange for marine insurance for the cargo. Risk still transfers to the buyer after goods are loaded on the ship. Insurance helps the buyer claim loss or damage during transit.
→ Seller ships to Hamburg Port, Germany with insurance.
→ Insured shipment to Singapore Port.
CPT applies to any mode of transport like road, air, or sea. Seller pays the freight charges till the named place of destination (like buyer’s warehouse, terminal, etc.). But risk passes to the buyer once goods are handed over to the carrier. Insurance is not mandatory in CPT.
→ Seller arranges transport till buyer’s warehouse in Delhi.
→ Goods sent till buyer’s warehouse in London.
CIP is like CPT but with an additional responsibility on the seller. The seller will arrange transport till buyer’s place and also provide insurance coverage for the goods till delivery. Risk transfers to the buyer after goods are given to the carrier, but insurance helps the buyer in case of damage.
→ Seller sends insured goods till buyer’s warehouse in Dubai.
→ Insured delivery till buyer’s location in Italy.
DAP means the seller bears maximum responsibility except import duty. Seller arranges export customs clearance, freight, unloading at the destination port, and delivery till buyer’s location. Buyer has to only pay import duty and handle local customs clearance.
→ Seller delivers goods till buyer’s office in New York.
→ Material delivered at buyer’s factory in Dhaka.
DPU is similar to DAP, but here the seller’s responsibility is even more. The seller delivers the goods at the buyer’s location and also unloads them from the vehicle. It is the only Incoterm where unloading at the destination is seller’s duty. The buyer only handles import duty and further storage.
→ Seller unloads goods at buyer’s warehouse in London.
→ Seller unloads material at buyer’s godown in South Africa.
DDP means maximum responsibility for the seller. Seller does everything from packaging, transport, export clearance, ocean freight, import customs, duties, taxes, and delivery till buyer’s location. Buyer just receives the goods without doing anything.
→ Seller delivers laptops at Germany office, fully cleared.
→ Seller delivers garments to France warehouse with all duties paid.