Incoterms and Delivery of Goods: Group E - Departure

Incoterms and delivery of goods
Incoterms or International Commercial terms are a series of international sales terms,

published by International Chamber of Commerce (ICC) and widely used in international
commercial transactions. These are accepted by governments, legal authorities and
practitioners worldwide for the interpretation of most commonly used terms in international
trade. This reduces or removes altogether uncertainties arising from different interpretation of
such terms in different countries. Scope of this is limited to matters relating to rights and
obligations of the parties to the contract of sale with respect to the delivery of goods sold.
They are used to divide transaction costs and responsibilities between buyer and seller and
reflect state-of-the-art transportation practices. They closely correspond to the U.N.
Convention on Contracts for the International Sale of Goods. The first version was introduced
in 1936 and the present dates from 2000.
As of January 1, 2011 the eighth edition, Incoterms 2010 have effect. The changes therein
affect all of the five terms previously listed in section D, which are now obsolete and
replaced with these three: DAT (Delivered at Terminal), DAP (Delivered at Place), and DDP
(Delivered Duty Paid). The new terms apply to all modes of transport.
Group E – Departure
EXW – Ex Works (named place)
The seller makes the goods available at his premises. The buyer is responsible for all
charges.
This trade term places the greatest responsibility on the buyer and minimum obligations on
the seller. The Ex Works term is often used when making an initial quotation for the sale of
goods without any costs included.
EXW means that a seller has the goods ready for collection at his premises (Works, factory,
warehouse, plant) on the date agreed upon.
The buyer pays all transportation costs and also bears the risks for bringing the goods to their
final destination.
Group F – Main carriage unpaid

FCA – Free Carrier (named places)
The seller hands over the goods, cleared for export, into the custody of the first carrier
(named by the buyer) at the named place. This term is suitable for all modes of
transport, including carriage by air, rail, road, and containerised / multi-modal sea
transport. This is the correct "freight collect" term to use for sea shipments in
containers, whether LCL (less than container load) or FCL (full container load).
FAS – Free Alongside Ship (named loading port)
The seller must place the goods alongside the ship at the named port. The seller must
clear the goods for export. Suitable only for maritime transport only but NOT for
multimodal sea transport in containers .
This term is typically used for heavy-lift or bulk cargo.
FOB – Free on board (named loading port)
The seller must themselves load the goods on board the ship nominated by the buyer,
cost and risk being divided at ship's rail. The seller must clear the goods for export.
Maritime transport only but NOT for multimodal sea transport in containers (see
Incoterms 2010, ICC publication 715). The buyer must instruct the seller the details of
the vessel and port where the goods are to be loaded, and there is no reference to, or
provision for, the use of a carrier or forwarder. It DOES NOT include Air transport.
This term has been greatly misused over the last three decades ever since Incoterms
1980 explained that FCA should be used for container shipments.
Group C – Main carriage paid

CFR or CNF – Cost and Freight (named destination port)
Seller must pay the costs and freight to bring the goods to the port of destination.
However, risk is transferred to the buyer once the goods have crossed the ship's rail.
Maritime transport only and Insurance for the goods is NOT included. Insurance is at
the Cost of the Buyer.
CIF – Cost, Insurance and Freight (named destination port)
Exactly the same as CFR except that the seller must in addition procure and pay for
insurance for the buyer. Maritime transport only.
CPT – Carriage Paid To (named place of destination)
The general/containerized/multimodal equivalent of CFR. The seller pays for carriage
to the named point of destination, but risk passes when the goods are handed over to
the first carrier.
CIP – Carriage and Insurance Paid (To) (named place of destination)
The containerized transport/multimodal equivalent of CIF. Seller pays for carriage
and insurance to the named destination point, but risk passes when the goods are
handed over to the first carrier.
Group D – Arrival
DAF – Delivered At Frontier (Deliveplace)
This term can be used when the goods are transported by rail and road. The seller
pays for transportation to the named place of delivery at the frontier. The buyer
arranges for customs clearance and pays for transportation from the frontier to his
factory. The passing of risk occurs at the frontier.
DES – Delivered Ex Ship (named port)
Where goods are delivered ex ship, the passing of risk does not occur until the ship
has arrived at the named port of destination and the goods made available for
unloading to the buyer. The seller pays the same freight and insurance costs as he
would under a CIF arrangement. Unlike CFR and CIF terms, the seller has agreed to
bear not just cost, but also Risk and Title up to the arrival of the vessel at the named
port. Costs for unloading the goods and any duties, taxes, etc… are for the Buyer. A
commonly used term in shipping bulk commodities, such as coal, grain, dry chemicals
- - - and where the seller either owns or has chartered, their own vessel.
DEQ – Delivered Ex Quay (named port)
This is similar to DES, but the passing of risk does not occur until the goods have
been unloaded at the port of destination.
DDU – Delivered Duty Unpaid (named destination place)
This term means that the seller delivers the goods to the buyer to the named place of
destination in the contract of sale. The goods are not cleared for import or unloaded
from any form of transport at the place of destination. The buyer is responsible for the
costs and risks for the unloading, duty and any subsequent delivery beyond the place
of destination. However, if the buyer wishes the seller to bear cost and risks
associated with the import clearance, duty, unloading and subsequent delivery beyond
the place of destination, then this all needs to be explicitly agreed upon in the contract
of sale.
DDP – Delivered Duty Paid (named destination place)
This term means that the seller pays for all transportation costs and bears all risk until
the goods have been delivered and pays the duty. Also used interchangeably with the
term "Free Domicile". The most comprehensive term for the buyer. In most of the
importing countries, taxes such as (but not limited to) VAT and excises should not be
considered prepaid being handled as a "refundable" tax. Therefore VAT and excises
usually are not representing a direct cost for the importer since they will be recovered
against the sales on the local (domestic) market.

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Incoterms and delivery of goods

Incoterms or International Commercial terms are a series of international sales terms,

Group F – Main carriage unpaid

Group C – Main carriage paid

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