“Ex Works” means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.). The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable.

This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed. EXW is mostly suitable for domestic trade.

In simple terms, if you are the buyer and you are buying the goods from the seller on EXW terms, you will need to send your truck to the seller’s premises and collect the cargo from there and take care of all the other shipping requirements to get it to your destination.

Officially the shipper is NOT obliged to do anything other than provide you access to the cargo.

Of course, based on your relationship with the seller, there may be an unofficial option wherein the shipper may assist with the loading of the goods onto your vehicle, etc.

There is also an official option wherein you can include the words “LOADED” to the term EXW so that the seller may extend his service to assist with the loading operations.

However, if there is any damage to the cargo during that loading process, that risk and cost may still be yours as the buyer. It is vital, therefore, that this point is clarified with the shipper beforehand at the time of the signing of the sales contract.

In the case of EXW, it is safe to say that the seller has minimal obligations, risks & costs whereas the buyer has all the risks and obligations.

“Free Carrier” means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.

This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

In an FCA transaction, the seller could be involved in the actual movement of the cargo up to a certain point.

This point could be the warehouse of the carrier, the warehouse of the buyer’s agent, the port or a terminal in the port or any other location agreed between the buyer and seller.

In an FCA transaction, the seller must take care of

•     All pre-export documentation relating to the shipment such as port, customs, transport documentation till the point of delivery
•     Export customs clearance where required
•     Loading formalities if the delivery point is agreed to be the seller’s warehouse/premises

The buyer, on the other hand, must take care of

•     The transportation of the goods from the point of delivery by the seller till cargo reaches the destination
•     This could include the ocean leg as well which includes negotiating the rates with the shipping lines
•     The risk of such movement from the point of delivery by the seller till the final point of rest
•     The clearance of the goods at destination and any movement/risk till the final point of rest

In the case of FCA the seller’s obligations, risks and costs are till the agreed point of delivery, and the buyer’s obligations, risks and costs start from that agreed point of delivery.

FCA terms could end at

•     Seller’s premises
•     Buyer’s agent at the port of load
•     Carrier’s depot or terminal at the port of load
•     Loaded on board the ship at the port of load

“Carriage Paid To” means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

In a CPT transaction, the seller is obliged to deliver the goods to the agreed destination.

This agreed destination in CPT term could be any place expressly agreed between the buyer and seller and will most commonly be an overseas destination.

As part of fulfilling this obligation, the seller must

• Do the export clearance formalities
• Pay for the transportation from his door to the named and agreed destination and enter into the relevant contract of carriage with the various carriers
• Take care of any and all export permits, quotas, special documentation, etc relating to the cargo

It is crucial for the buyer and seller to understand that in a CPT transaction, the “risk” passes from seller to buyer once the seller delivers the cargo to the first carrier, whereas the costs up to the named destination will still be for the seller.

Because the CPT term may be used for all modes of transport, the movement could involve a road, rail, and sea movement (in that order). This means there are 3 carriers involved here.

In CPT, once the seller hands over the goods to the road carrier for further movement, the “risk” transfers from the seller to the buyer, but the cost of the movement till the point of destination still remains with the seller.

In a CPT transaction, the buyer takes care of

• Any transport movement from the agreed place of destination
• The risk from the time the seller hands over the cargo to the 1st carrier as mentioned above
• The full cargo insurance portion from origin to destination
• Any and all import permits, quotas, special documentation, etc relating to the cargo
• Import customs clearance and all related formalities

In CPT, since the contract of carriage is arranged by the seller at his expense, it is normal for the seller to use his service contract and also prepay the cost of the freight up to the destination.

CPT terms could generally end at

•     A seaport in the destination country
•     An inland container depot in the destination country
•     A door location in the destination country

“Carriage and Insurance Paid to” means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

In a CIP transaction, as the name suggests, apart from the delivery of goods to the named destination, the seller is also obliged to arrange for insurance to cover the buyer’s risk of loss of or damage to the goods during carriage.

This agreed destination in CIP term could be any place expressly agreed between the buyer and seller and will most commonly be an overseas destination.

As part of fulfilling this obligation, the seller must

• Do the export clearance formalities
• Pay for the transportation from his door to the named and agreed destination and enter into the relevant contract of carriage with the various carriers
• Arrange and pay for the insurance to cover the buyer’s risk
• Take care of any and all export permits, quotas, special documentation, etc relating to the cargo

It is crucial for the buyer and seller to understand that in a CIP transaction, the “risk” passes from seller to buyer once the seller delivers the cargo to the first carrier, whereas the costs up to the named destination will still be for the seller.

Because the CIP term may be used for all modes of transport, the movement could involve a road, rail, and sea movement (in that order). This means there are 3 carriers involved here.

In CIP, once the seller hands over the goods to the road carrier for further movement, the “risk” transfers from the seller to the buyer, but the cost of the movement till the point of destination still remains with the seller.

In a CIP transaction, the buyer takes care of

• Any transport movement from the agreed place of destination
• The risk from the time the seller hands over the cargo to the 1st carrier as mentioned above
• Any additional insurance coverage over and above the minimum insurance coverage that the seller covers
• Any and all import permits, quotas, special documentation, etc relating to the cargo
• Import customs clearance and all related formalities

In CIP since the contract of carriage is arranged by the seller at his expense, it is normal for the seller to use his service contract and also prepay the cost of the freight up to the destination.

CIP terms could generally end at

•     A seaport in the destination country
•     An inland container depot in the destination country
•     A door location in the destination country

“Delivered at Place” means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. The seller bears all risks involved in bringing the goods to the named place.

This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

In DAP terms, the seller is obliged to deliver the cargo to a mutually agreed destination further than the terminal.

This agreed terminal could be the buyer’s own premises or any place as mutually agreed.

As part of fulfilling this obligation, the seller must    

• Do the export clearance formalities
• Pay for transportation from his door to the agreed destination
• Enter into relevant contracts of carriage with the various carriers up to the name destination including any on-carriages applicable
• Take care of any and all export permits, quotas, special documentation, etc. relating to the cargo
• All risk up to the agreed point of delivery
• Must ensure that the goods actually arrive at the destination.
• In a DAP transaction, the buyer takes care of
• Any transport movement from the agreed place of destination
• Any risk after the cargo has been delivered at the agreed destination
• Any insurance past the point of delivery
• Any and all import permits, quotas, special documentation, etc. relating to the cargo at the destination
• Import customs clearance and all related formalities
  
  

DAP terms could generally end at

•     Buyer’s premises or warehouse
•     Their agent’s premises or warehouse
•     Their customer’s premises or warehouse
•     Or other inland delivery points agreed

“Delivered at Place Unloaded” means that the seller delivers the goods while transferring the risk to the buyer when the goods are unloaded from the arriving means of transport at the disposal of the buyer at the named place of destination or any other agreed point within that place.

The seller bears all risks involved up to the named place of destination including the risk of moving the goods and unloading them.

Under DPU, both the delivery and arrival at destination are the same and is the only rule which requires the seller to unload goods at the destination.

The seller should ensure that they have an agent or other arrangements in position to make sure that the unloading at the named place takes place smoothly.

This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

DPU may be considered as a natural extension of DAP terms, as under DAP, the seller is required to only deliver ready for unloading whereas in DPU the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport including the unloading at the named place of destination.

As part of fulfilling this obligation, the seller must

• Do the export clearance formalities
• Pay for the transportation from his door to the named terminal
• Enter into relevant contracts of carriage with the various carriers up to the named terminal
• Take care of any and all export permits, quotas, special documentation, etc. relating to the cargo
• All risk up to the agreed point of delivery
• Must ensure that the goods arrive at the destination.
• In a DPU transaction, the buyer takes care of
• Any transport movement from the agreed place of destination
• Any risk after the cargo has been unloaded at the agreed destination
• Any insurance past the point of delivery
• Any and all import permits, quotas, special documentation, etc relating to the cargo at the destination
• Import customs clearance and all related formalities
  
  

DPU terms could generally end at

•     A seaport or a specific terminal within the port in the destination country
•     A nominated custom bonded inland container depot or terminal in the destination country
•     A warehouse of the buyer or their nominated agent

“Delivered at Place Unloaded” means that the seller delivers the goods while transferring the risk to the buyer when the goods are unloaded from the arriving means of transport at the disposal of the buyer at the named place of destination or any other agreed point within that place.

The seller bears all risks involved up to the named place of destination including the risk of moving the goods and unloading them.

Under DPU, both the delivery and arrival at destination are the same and is the only rule which requires the seller to unload goods at the destination.

The seller should ensure that they have an agent or other arrangements in position to make sure that the unloading at the named place takes place smoothly.

This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

DPU may be considered as a natural extension of DAP terms, as under DAP, the seller is required to only deliver ready for unloading whereas in DPU the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport including the unloading at the named place of destination.

As part of fulfilling this obligation, the seller must

• Do the export clearance formalities
• Pay for the transportation from his door to the named terminal
• Enter into relevant contracts of carriage with the various carriers up to the named terminal
• Take care of any and all export permits, quotas, special documentation, etc. relating to the cargo
• All risk up to the agreed point of delivery
• Must ensure that the goods arrive at the destination.
• In a DPU transaction, the buyer takes care of
• Any transport movement from the agreed place of destination
• Any risk after the cargo has been unloaded at the agreed destination
• Any insurance past the point of delivery
• Any and all import permits, quotas, special documentation, etc relating to the cargo at the destination
• Import customs clearance and all related formalities
  
  

DPU terms could generally end at

•     A seaport or a specific terminal within the port in the destination country
•     A nominated custom bonded inland container depot or terminal in the destination country
•     A warehouse of the buyer or their nominated agent

“Delivered Duty Paid” means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination.

The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.

This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

DDP may be considered as a term at the other end of the trade spectrum in terms of obligations as compared to EXW where the buyer has the maximum obligation.

In DDP, the seller has the maximum obligation as it involves the delivery of the goods to the buyer at the agreed destination.

So, if you are the buyer buying on a DDP basis, you can take a seat and relax while the seller will

• Do the export clearance formalities
• Pay for the transportation from his door to the agreed destination
• Enter into relevant contracts of carriage with the various carriers up to the agreed destination including any on-carriages applicable
• Take care of any and all export permits, quotas, special documentation, etc. relating to the cargo
• Cover all risk up to the agreed point of delivery
• Ensure that the goods actually arrive at the destination
• Take care of customs clearance formalities at the destination port(s), pay the duty, VAT, and other local charges applicable
• In a DDP transaction, the buyer only needs to take care of
• Any further transport movement from the agreed place of destination
• Any risk after the cargo has been delivered at the agreed destination
• Any insurance past the point of delivery
  
  

DDP terms could generally end at

•     Buyer’s premises or warehouse
•     Their agent’s premises or warehouse
•     Their customer’s premises or warehouse
•     Or other inland delivery points agreed

Under DDP terms neither the buyer nor the seller is obliged to insure the goods and this insurance requirement is not specifically covered in the Incoterms® rules. This crucial issue must be discussed and agreed upon as part of the sales contract and terms of sale.