International Shipping Terminology
The international freight community has adopted a number of terms for freight shipments around the world. Some common ones are presented here to help reduce the misuse of overworked terms such as FOB and CIF, both of which are only valid for shipments by sea.
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|There are four groups of terms:|
EXW – Ex Works
The goods are made available by the seller at the seller’s premises. Technically, it is the responsibility of the buyer to arrange loading, but commonly, the seller loads as a courtesy.
FCA – Free carrier (all)
The seller delivers the goods to a carrier appointed by the buyer.
FAS – Free Alongside Ship (sea)
Applies to all forms of transport. The technically correct term for what North American industry loosely means when “F.O.B. Our Shop” is used. The buyer technically chooses the carrier, but it is the responsibility of the seller to load the goods.
FOB – Free on Board Ship (sea)
Seller contracts out shipment to a certain point without assuming the RISK of loss or damages.
CFR – Cost and Freight (sea)
CIF – Cost Insurance and Freight (sea)
This term is commonly misused in North America to include all forms of transport.
CPT – Carriage Paid (all)
CIP – Carriage and Insurance Paid to (all)
The technically-correct term where CIF has been misused in the past.
Seller bears all costs and risks needed to bring the goods to the country of destination