English Maritime Terminology on Port and Maritime Logistics

Export clauses show what part of the transport and insurance costs will be paid by the suppliers and what part by the customers. In international trade, a series of international commercial terms (Incoterms) are used to clarify the rules and terms that buyers and sellers use in international and domestic trade contracts. Incoterms were developed in 1936 by The International Chamber of Commerce (ICC), and are updated periodically to conform to changing trade practices. Incoterms show what costs should be paid by whom and under which export clause, and are recognised by banks, authorities, trading companies, and other regulated bodies. According to the type of transportation (sea, road, air, or railway), these terms may change. There are four factors identified in Incoterms: delivery point, transportation costs, export-import requirements, and insurance.

List of Incoterms

Incoterms used in maritime transport

FAS – Free Alongside: the seller arranges for the goods to be delivered to the dockside, at the named port of shipment; the buyer is responsible for all the formalities (unloading, sea freight, insurance, and delivery) at the port of destination.

FOB – Free on Board: the seller delivers the goods over the ship’s rails, cleared for export purposes, whereas the buyer is responsible for all costs and charges (sea freight, insurance, delivery, and import taxes).

CFR – Cost and Freight is the most commonly used incoterm in international trade; the seller is responsible for the delivery of goods to the named ship, the loading costs, and freight; the buyer arranges and pays for the insurance and delivery in their own country.

CIF – Cost, Insurance and Freight is another commonly used incoterm in international trade; the seller is responsible for delivering the goods to a named port of discharge, and also pays for all shipping costs, including the insurance; the buyer arranges the unloading and delivery from the docks to their address and pays the import taxes.

EXW – Ex-Works: the seller is responsible for the manufacturing of products; the buyer is responsible for clearing and loading the goods, for transportation, and also for preparing the export documentation as well as getting the goods through customs. In the Ex-Works, the seller has the least amount of responsibility because the buyer covers all costs and bears all risks until the goods reach the buyer’s warehouse.

FCA – Free Carrier: the seller of the goods is required to deliver the goods to the first carrier; the transportation cost is the responsibility of the seller until the goods are received by the first carrier. Once the seller delivers the goods to the carrier, the buyer assumes all responsibility for the goods.

CPT – Carriage Paid To: the seller is responsible for clearing the goods, arranging the carriage, and delivering the goods to the carrier, which means the terminal handling is done by the seller. The seller also pays the freight for the carriage of the goods to the named destination. The risk of loss and damage to the goods will be transferred to the buyer once the goods are delivered to the carrier.

DDP – Delivery Duty Paid: the seller is responsible for delivering the goods to the buyer’s country and the buyer gets to pay for all costs and import taxes and duties. This incoterm places the maximum obligations on the seller, although the seller is not responsible for the unloading of these goods.