In international trade, it is important to clearly define the obligations of the buyer and the seller, including where the goods will be delivered, who will bear or share the costs, and whether insurance and carriage contracts will be arranged.
One of the key reference sources in this regard is INCOTERMS (International Commercial Terms), published by the International Chamber of Commerce (ICC). INCOTERMS are internationally recognized rules used in contracts between buyers and sellers to define their respective responsibilities.
The latest version referred to here is INCOTERMS 2010, under which there are 11 delivery terms in international trade, divided into two categories:
- Rules for all modes of transport: EXW, FCA, CPT, CIP, DAT, DAP, DDP
- Rules for sea and inland waterway transport: FAS, FOB, CFR, CIF
EX WORKS (EXW)
Under this delivery term, the seller delivers the goods by placing them at the buyer’s disposal at the seller’s premises or another named place, such as a factory, warehouse, or place of business. The seller is not required to load the goods onto any collecting vehicle. From the moment of delivery, all costs and risks associated with the goods are borne by the buyer. Under this term, the seller assumes minimum responsibility.
FREE CARRIER (FCA)
Under this delivery term, the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another designated place. The seller must complete the export customs formalities for the goods at its own risk and expense. From the moment of delivery, all costs and risks associated with the goods are transferred to the buyer.
FREE ALONGSIDE SHIP (FAS)
Under this delivery term, the seller delivers the goods by placing them alongside the vessel selected by the buyer at the designated port of shipment, for example on a quay or barge. If the vessel is berthed, the goods are delivered alongside the vessel at the loading point; if the vessel is anchored offshore, the goods are transported by barge to the vessel’s side.
The risk of loss or damage and all associated costs pass to the buyer once the goods are placed alongside the vessel. From that point onward, the buyer bears all costs. At its own risk and expense, the seller obtains any export licenses or other official authorizations required and completes all customs formalities necessary for the export of the goods.
FREE ON BOARD (FOB)
Under this delivery term, which is widely used in Türkiye, the seller delivers the goods on board the vessel selected by the buyer at the designated port of shipment, or procures goods already delivered in this manner.
The risk of loss or damage and associated costs pass to the buyer once the goods are on board the vessel. From that point onward, the buyer bears all costs. At its own risk and expense, the seller obtains all necessary export licenses or other official authorizations and completes the customs formalities required for export.
COST AND FREIGHT (CFR)
Under this delivery term, the seller delivers the goods on board the vessel or procures goods already delivered in this manner. The risk of loss or damage passes to the buyer once the goods are on board.
At its own risk and expense, the seller obtains all necessary export licenses or other official authorizations and completes the required export customs formalities. The seller also arranges the contract of carriage and pays the costs and freight necessary to transport the goods to the designated port of destination.
COST, INSURANCE AND FREIGHT (CIF)
Under this delivery term, the seller delivers the goods on board the vessel or procures goods already delivered in this manner. The risk of loss or damage passes to the buyer once the goods are on board.
The seller completes the necessary export customs procedures and obtains any required export licenses or official authorizations at its own expense. The seller also arranges and pays for the carriage of the goods to the designated port of destination.
In addition, the seller obtains insurance coverage against the buyer’s risk of loss of or damage to the goods during transportation.
CARRIAGE PAID TO (CPT)
Under this delivery term, the seller delivers the goods to a carrier selected and contracted by the seller. The seller completes the export customs formalities, arranges the contract of carriage to the designated destination, and pays the transportation costs.
At its own risk and expense, the seller obtains any export licenses or other official authorizations required and completes all customs procedures necessary for the export of the goods.
CARRIAGE AND INSURANCE PAID TO (CIP)
Under this delivery term, the seller delivers the goods to a carrier or another person selected by the seller at the agreed location. The seller arranges the contract of carriage and pays the transportation costs required to deliver the goods to the designated destination.
The seller also completes all export customs formalities and obtains any required export licenses or official authorizations at its own expense. In addition, the seller obtains insurance coverage against the buyer’s risk of loss of or damage to the goods during transportation.
DELIVERED AT TERMINAL (DAT)
Under this delivery term, the seller delivers the goods by placing them at the buyer’s disposal after unloading them from the arriving means of transport at a designated terminal at the named place or port of destination.
The term “terminal” includes any place, whether covered or uncovered, such as a quay, warehouse, container yard, road terminal, rail terminal, or air cargo terminal.
The seller completes all necessary export customs procedures and arranges and pays for transportation to the designated terminal. The seller bears all risks and costs associated with transporting and unloading the goods at the designated place or port of destination.
DELIVERED AT PLACE (DAP)
Under this delivery term, the seller delivers the goods by placing them at the buyer’s disposal on the arriving means of transport, ready for unloading at the designated destination.
The seller bears all risks and costs associated with transporting the goods to the named destination. At its own expense, the seller obtains all necessary export licenses or official authorizations and completes the required export customs procedures.
The seller also arranges and pays for transportation to the designated delivery location or, where applicable, to the specifically agreed point within that location.
DELIVERED DUTY PAID (DDP)
Under this delivery term, the seller delivers the goods by placing them at the buyer’s disposal, cleared for import and ready for unloading from the arriving means of transport at the designated destination.
The seller bears all risks and costs associated with transporting the goods to the named destination. The seller is responsible for completing customs formalities for both export and import, paying all applicable export and import duties, taxes, and charges, and fulfilling all required customs procedures.
Under DDP, the seller assumes the maximum level of responsibility.
