Glossary Of Terms and Abbreviations

Ex-Works
One of the simplest and the most basic shipment arrangements places the minimum responsibility on the seller with great responsibility on the buyer.In an EX-Works transaction,goods are basically made available for pickup at the shipper/seller’s factory or warehouse and “delivery” is accomplished when the merchandise is released to the consignee’s freight forwarder. The buyer is responsible for making arrangements with their forwarder for insurance, exports clearance and handling all other paperwork.

FOB (Free On Board)
One of the most commonly used and misused-terms, FOB means that the shipper/seller uses his freight forwarder to move the merchandise to the port or designated point of origin. Though frequently used to describe inland movement of cargo. FOB specifically refers to ocean or inland waterway transportation of goods.”Delivery”is accomplished when the shipper/seller releases the goods to buyer’s forwarder. The buyer’s responsibility for insurance and transportation begins at the same moment.

FCA (Free Carrier)
In this type of transaction, the seller is responsible for arranging transportation, but he is acting at the risk and the expense of the buyer, in FCA the seller chooses and works withfreight forwarder or the carrier. “Delivery” is accomplished at a predetermined port or destination point and the buyer is responsible for insurance.

FAS (Free Alongside Ship)*
In these transactions, the buyer bears all the transportation costs and the risk of loss of good. FAS requires the shipper/seller to clear goods for export, which is a reversal from past practices. Companies selling on these terms will ordinarily use their freight forwarder to clear the good for export. “Delivery” is accomplished when the goods are turned over to the Buyers Forwarder for insurance and transportation.

CFR (Cost and Freight)
This term formerly known as CNF (C&F) defines two distinct, separate responsibilities-one is dealing with the actual cost of merchandise “C”, and the other “F” refers to the freight charges to a predetermined destination point. It is the shipper/seller’s responsibilities to get good from their door to the port of destination. “Delivery” is accomplished at this time. It is the buyer’s responsibility to cover insurance from the port of origin or port of shipment to buyer’s door. Given that the shipper is responsible for transportation, the shipper also chooses the forwarder.

CIF (Cost, Insurance and Freight)
This arrangements similar to CFR, but instead of buyer insuring the goods for the maritime phase of the voyage, the shipper/seller will insure the merchandise. In this arrangement, the seller usually chooses the forwarder. “Delivery” as above, is accomplished at the port of destination.

CPT (Carriage Paid To)
In CPT transactions the shipper/seller has the same obligations found with CIF, with the addition that the seller has to buy cargo insurance, naming the buyer as the insured while the good are in transit.

CIP (Carriage and Insurance Paid To)
This term is primarily used for multimodal transport. Because it relies on the carrier’s insurance, the shipper/seller is only required to purchase minimum coverage. When this particular agreement is in force, Freight Forwarders often act in effect, as carriers. The buyer’s insurance is effective when the goods are turned over to the forwarder.

DAF (Delivered At Frontier)
Here the seller’s responsibility is to hire a forwarder to take to take goods to a named frontier, which is usually a border crossing point, and clear them for export.” Delivery” occurs at this time. The buyer’s responsibility is to arrange with their forwarder for the pick up of goods after they are cleared for export, carry them across the border, clear them for importation and effect delivery. In most cases, the buyer’s forwarder handles the task of accepting the goods at the border across the foreign soil.

DES (Delivered Ex Ship)
In this type of transaction, it is the seller’s responsibility to get the goods to the port of destination or to engage the forwarder to the move cargo to the port of destination uncleared.”Delivery” occurs at this time. Any destination charges that occur after the ship is docked are the buyer’s responsibility.

DEQ (Delivered Ex Quay)*
In this arrangement, the buyer/consignee is responsible for duties and charges and the seller is responsible for delivering the goods to the quay, wharf or port of destination. In a reversal of previous practice, the buyer must also arrange for custom clearance.

DDU (Delivered Duty Unpaid)
This arrangement is the same as with DDP, except for the fact that the buyer is responsible for the duty, fees and taxes.

DDP (Delivered Duty Paid)
DDP terms tend to be used in intermodal or courier-type shipments. Whereby, the shipper/seller is responsible for dealing with ball the tasks involved in moving goods from the manufacturing plant to the buyer/consignee’s door. It is the shipper/seller’s responsibility to insure the goods and absorb all costs and risks including the payment of duty and fees.

These are internationally accepted commercial terms defining the respective roles of the buyer and seller in the arrangement of transportation and other responsibilities and clarify when the ownership of the merchandise takes place. They are used in conjunction with a sales agreement or other method of transacting the sale.

• Cost and Freight
• Cost, Insurance and Freight
• Carriage and Insurance Paid To
• Carriage Paid To
• Delivered at Frontier
• Delivered Duty Paid
• Delivered Duty Unpaid
• Delivered Ex Ship
• Ex Works
• Free Alongside Ship
• Free Carrier
• Free On Board


CFR - Cost and Freight - Title, risk and insurance cost pass to buyer when delivered on board the ship by seller who pays the transportation cost to the destination port. Used for sea or inland Delivered Ex Quay waterway transportation.

CIF - Cost, Insurance and Freight - Title and risk pass to buyer when delivered on board the ship by seller who pays transportation and insurance cost to destination port. Used for sea or inland waterway transportation.

CIP - Carriage and Insurance Paid To - Title and risk pass to buyer when delivered to carrier by seller who pays transportation and insurance cost to destination. Used for any mode of transportation.

CPT - Carriage Paid To - Title, risk and insurance cost pass to buyer when delivered to carrier by seller who pays transportation cost to destination. Used for any mode of transportation.

DAF - Delivered at Frontier - Title, risk and responsibility for import clearance pass to buyer when delivered to named border point by seller. Used for any mode of transportation.

DDP - Delivered Duty Paid - Title and risk pass to buyer when seller delivers goods to named destination point cleared for import. Used for any mode of transportation.

DDU - Delivered Duty Unpaid - Title, risk and responsibility of import clearance pass to buyer when seller delivers goods to named destination point. Used for any mode of transportation. Buyer is obligated for import clearance.

DDU - Delivered Duty Unpaid - Seller fulfills his obligation when goods have been made available at the named place in the country of importation

DEQ - Delivered Ex Quay (Duty Paid) - Title and risk pass to buyer when delivered on board the ship at the destination point by the seller who delivers goods on dock at destination point cleared for import. Used for sea or inland waterway transportation.

DES - Delivered Ex Ship - Title, risk, responsibility for vessel discharge and import clearance pass to buyer when seller delivers goods on board the ship to destination port. Used for sea or inland waterway transportation.

EXW - Ex Works - Title and risk pass to buyer including payment of all transportation and insurance cost from the seller's door. Used for any mode of transportation.

FAS - Free Alongside Ship - Title and risk pass to buyer including payment of all transportation and insurance cost once delivered alongside ship by the seller. Used for sea or inland waterway transportation. The export clearance obligation rests with the seller.

FCA - Free Carrier - Title and risk pass to buyer including transportation and insurance cost when the seller delivers goods cleared for export to the carrier. Seller is obligated to load the goods on the Buyer's collecting vehicle; it is the Buyer's obligation to receive the Seller's arriving vehicle unloaded.

FOB - Free On Board and risk pass to buyer including payment of all transportation and insurance cost once delivered on board the ship by the seller. Used for sea or inland waterway transportation.

Note: EXW, CPT, CIP, DAF, DDU and DDP are commonly used for any mode of transportation. FAS, FOB, CFR, CIF, DES, and DEQ are used for sea and inland waterway.

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