In the 2020 General Rules for the Interpretation of Trade Terms, trade terms are subdivided into 11 terms: EXW, FOB, FAS, FCA, CFR, CIF, CPT, CIP, DAP, DPU, DDP, etc.
This article introduces several trade terms that are frequently used.
FOB-Free on Board
FOB is one of the commonly used trade terms. It means that the Seller delivers the goods to the ship designated by the Buyer. The Purchaser shall bear all costs and risks from the delivery of goods to the location of the Purchaser’s factory.
Place of delivery: on the deck of the ship at the port of shipment where the seller is located.
The Supplier undertakes:
● Expenses: transportation and handling charges from the factory warehouse to the ship deck at the loading port.
● Risk: all risks from the factory warehouse to the ship deck at the loading port.
● Other document procedures: all documents required for export shall be prepared, such as commercial invoice, packing list, certificate of origin, list of hazardous substances, etc.
The Purchaser undertakes:
● Expenses: all expenses after the delivery of goods, such as transportation fees, insurance premiums, tariffs of exporting and importing countries, etc.
● Risk: all risks after the delivery of goods, such as loss and theft of goods, import restriction, etc.
CIF-Cost, Insurance and Freight=CFR+Insurance
It refers to that the Seller delivers the goods to the ship designated by the Buyer, and pays the insurance premium and transportation cost from the factory warehouse to the wharf of the Buyer’s destination port. The Purchaser shall bear part of the costs and risks from the delivery of goods to the location of the Purchaser’s factory.
Place of delivery: on the deck of the ship at the port of shipment where the seller is located.
The Supplier undertakes:
● Cost: insurance and transportation costs from the factory warehouse to the purchaser’s port of destination wharf.
● Risk: all risks from the factory warehouse to the ship deck at the loading port.
● Other document procedures: all documents required for export shall be prepared, such as commercial invoice, packing list, certificate of origin, list of hazardous substances, etc.
The Purchaser undertakes:
● Cost: all costs after the delivery of goods, excluding the insurance and transportation costs paid by the supplier, such as: part of the transportation costs, part of the insurance costs, customs duties of the importing country, etc.
● Risk: all risks after the delivery of goods, such as loss and theft of goods, import restriction, etc.
Supplementary note: Although the Seller has paid the insurance premium and transportation cost to the port of destination, the actual place of delivery has not been extended to the port of destination where the Buyer is located, and the Buyer needs to bear all risks and part of the costs after delivery.
CFR-Cost and Freight
It refers to that the seller delivers the goods to the ship designated by the buyer, and pays the transportation cost from the factory warehouse to the buyer’s port of destination. The Purchaser shall bear part of the costs and risks from the delivery of goods to the location of the Purchaser’s factory.
Place of delivery: on the deck of the ship at the port of shipment where the seller is located.
The Supplier undertakes:
● Cost: the transportation cost from the factory warehouse to the purchaser’s port of destination wharf.
● Risk: all risks from the factory warehouse to the ship deck at the loading port.
● Other document procedures: all documents required for export shall be prepared, such as commercial invoice, packing list, certificate of origin, list of hazardous substances, etc.
The Purchaser undertakes:
● Expenses: all expenses after the delivery of the goods, excluding the transportation expenses paid by the seller, such as partial transportation expenses, insurance premiums, tariffs of the importing country, etc.
● Risk: all risks after the delivery of goods, such as loss and theft of goods, import restriction, etc.
EXW-Ex Works
The Seller shall prepare the goods at its factory location or other designated places and deliver them to the Buyer. The Purchaser shall bear all costs and risks from the delivery of goods to the location of the Purchaser’s factory.
Delivery place: the factory warehouse where the seller is located or its designated place.
Supplier undertakes
● Cost: the cost of loading and unloading the goods onto the transport vehicle designated by the purchaser·
● Risk: No risk
● Other document formalities: assist the Purchaser in handling all documents required by export and import customs, such as commercial invoice, packing list, certificate of origin, list of hazardous substances, etc.
The Purchaser shall bear
● Expenses: all expenses after the delivery of goods, such as: transportation expenses, insurance premiums, tariffs of exporting and importing countries, etc.
● Risk: all risks after the delivery of goods, such as loss and theft of goods, restrictions on export or import, etc.
Post time: Jan-05-2023
