Shipping terminology can be a bit complicated, often with the use of various abbreviations or acronyms. Transco Cargo has put together a handy list of incoterms to better understand international shipping procedures. Did you know that it’s the International Chamber of Commerce in Paris that governs IncoTerms that are followed by the world with concern to trading? To be specific there are thirteen IncoTerms currently in use, essentially the use of IncoTerms in international sales facilitate risk management to avoid misunderstandings or disputes between the supplier and customer when trading between countries (especially when there are various national trading practices in place). As these terms are acknowledged by various authorities, international shipping and sales has become easier.
This blog post will feature a few Groups of IncoTerms, namely Departure, and Main Carriage not Paid by Seller.
EXW – Ex-Works: This is used during the initial quote for the sale of goods without the inclusion of any costs, whereby the buyer will incur any risk for shipping goods to their final destination. It should be noted that the buyer will responsible, where the supplier usually delivers the goods to the buyer’s place of business for handover.
Main Carriage not Paid by Seller
FAS: Free Alongside Ship: This is a term used when the seller of the goods has fulfilled their duty by handing over the goods to the buyer by placing them “alongside the vessel” at the specified port of the shipment. This also means that from that moment on, the costs and risks of the goods will be the buyer’s responsibility.
FCA: Free Carrier: This trade term refers to when the seller is required to deliver the goods to a specified port of shipment (an airport, terminal, etc) where the carrier operates. From the moment of delivery to the carrier location, , the costs and risks of the goods will be the buyer’s responsibility.
FOB: Free On Board: This term is used when the seller undertakes the costs and risk of transporting the goods to the port of shipment, usually along with loading costs. After which, the costs and risks of the goods will be the buyer’s responsibility.
We’ll be back with the rest of the IncoTerms for Main Carriage Paid by Seller and Arrival in the second instalment of the IncoTerms guide by Transco Cargo for international shipping. Being aware of these terms when carrying out trading can be invaluable for supply chain management when it concerns international shipping quotes for cargo.