Delivery Terms

Delivery terms specify agreed-upon responsibilities, costs, and risks for transporting goods between buyer and seller. Incoterms (International Commercial Terms) universally define these terms, comprising classifications like EXW (Ex Works), FCA (Free Carrier), CPT (Carriage Paid To), CIP (Carriage and Insurance Paid To), DAT (Delivered at Terminal), DAP (Delivered at Place), DDP (Delivered Duty Paid), FAS (Free Alongside Ship), FOB (Free on Board), CFR (Cost and Freight), and CIF (Cost, Insurance, and Freight).

Buyer’s responsibilities may include paying for freight charges, import duties, and arranging insurance for shipping. Seller’s responsibilities typically cover preparing goods for shipment, obtaining export licenses, and ensuring goods’ timely delivery. Risk transfer points differ per Incoterm; for instance, in EXW, risk transfers to the buyer at the seller’s premises, whereas in CIF, it shifts after the goods cross the ship’s rail at the port of departure.

Costs encompass transportation, insurance, and handling charges. In DDP terms, the seller incurs all costs up to the delivery location, including import duties and taxes. In FCA terms, the buyer pays for main carriage and insurance.

Risks involve loss, damage, or late delivery. Under CFR, the seller bears risk until goods are loaded onto the vessel, while the buyer assumes risk during transit. In CIF conditions, the seller provides insurance, reducing the buyer’s exposure to financial loss during shipment.

Examples of these terms in use include:

• EXW (Ex Works): The buyer collects goods from the seller’s location.
• FOB (Free on Board): The seller handles costs and risks until goods are aboard the designated ship.
• CIF (Cost, Insurance, and Freight): The seller pays for transit costs and insurance until goods reach the destination port.