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Terms of transport: INCOTERMS, sea and multimodal transport

Terms of transport: INCOTERMS, sea and multimodal transport

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Container transportation by sea and container trucks Rules of sea transport Organization of sea transport The cost of shipping

Types and sizes of shipping containers Shipping conditions

For international transportation, by road or by sea, it is necessary to use international legislation and terminology. When signing a contract for reloading cargo, study the rules of transportation – Incoterms, in order to avoid unforeseen situations and misunderstandings at the time of delivery of goods.

DDP
DELIVERED DUTY PAID

The term “Delivered Duty Paid” means that the seller will provide cleared customs-
cleared and the goods not unloaded from the arriving means of transport at the disposal of the buyer at the named place of destination. The seller must bear all costs and risks associated with the transport of the goods, including, where applicable1, any fees for importation into the country of destination (the word “fees” here means the responsibility and risks for carrying out customs clearance, as well as for paying customs formalities, customs duties, taxes and other charges).
Whereas the EXW term imposes minimum obligations on the seller, the DDP term implies the maximum obligations of the seller.
This term cannot be applied if the seller cannot, directly or indirectly, obtain an import license.
If the parties have agreed to exclude from the seller’s obligations some of the costs payable upon import (such as value added tax – VAT), this should be clearly defined in the contract of sale2.
If the parties wish the buyer to assume all risks and costs of importing the goods, the term DDU should be used. This term can be used regardless of the mode of transport, but when the delivery is made on board a ship or at a quay in the port of destination, the terms DES or DEQ should be used.

DDU
DELIVERED DUTY UNPAID

The term “Delivered duty free” means that the seller delivers the goods, uncleared and unloaded from the arriving means of transport, to the buyer at the named place of destination. The seller must bear all costs and risks associated with transporting the goods to this place, with the exception (if required) of any fees collected for importation in the country of destination (the word “fees” here means the responsibility and risks for carrying out customs clearance, as well as for payment of customs formalities, customs duties, taxes and other fees). Such fees must be the responsibility of the buyer, as well as other costs and risks incurred due to the fact that he was not able to clear customs for import in time.
However, if the parties wish the seller to bear the risks and costs of customs clearance, as well as part of the costs of importing the goods, this should be clearly stated in the relevant addendum to the contract of sale1.
Responsibility, risks and costs for unloading and reloading the goods depend on who controls the chosen place of delivery.
This term can be used regardless of the mode of transport, but when the delivery is made on board a ship or at a quay in the port of destination, the terms DES or DEQ should be used.

DEQ
DELIVERED EX QUAY

The term “Delivered ex berth” means that the seller has fulfilled his obligation to deliver when the goods, not cleared for import, are placed at the buyer’s disposal at the quay at the named port of destination. The seller must bear all costs and risks associated with the transport and unloading of the goods at the quay. The term DEQ imposes on the buyer the obligation to clear customs for the import of the goods, as well as to pay taxes, duties and other fees upon import. However, if the parties wish the seller to bear all or part of the costs of importing the goods, this should be clearly stated in the relevant addendum to the contract of sale1.
This term can only be applied to carriage by sea or inland waterway or multimodal transport, when the goods are unloaded from the ship to the quay at the port of destination. However, if the parties wish to include in the seller’s obligations the risks and costs associated with moving the goods from the quay to another place (warehouse, terminal, etc.), in the port or outside the port, the terms DDU and DDP should be used.

DES
DELIVERED EX SHIP b>)

The term “Delivered ex ship” means that the seller has delivered when he places the goods, uncleared for import, at the disposal of the buyer on board the ship at the named port of destination. The seller must bear all costs and risks of bringing the goods to the named port of destination until they have been unloaded. If the parties wish the seller to bear the costs and risks of unloading the goods, the term DEQ should be used. This term can only be used for carriage by sea, inland waterways or multimodal transport, when the goods arrive at the port of destination onudne.

DAF
DELIVERED AT FRONTIER b>)

The term “delivery to frontier” means that the seller has delivered when he has placed the unloaded goods cleared for export but not yet for import on the arriving means of transport at the disposal of the buyer at the named point or place at the frontier before the goods reach the customs frontier neighboring country. The term “frontier” means any frontier, including that of the country of export. Therefore, it is very important to accurately define the boundary by pointing to a specific point or place. However, if the parties wish the seller to take over the responsibility for unloading the goods from the arriving means of transport and bear all the risks and costs of such unloading, this should be clearly stated in the relevant addendum to the contract of sale1.
This term can be used for the carriage of goods by any mode of transport, when the goods are delivered to the land border.
If the delivery will take place at the port of destination on board the ship or at the quay, then the terms DES or DEQ should be used.

CIP
CARRIAGE AND INSURANCE PAID TO

The term “Freight/Carriage Paid To” means that the seller will deliver the goods to the carrier named by him. In addition, the seller must pay the costs associated with the carriage of the goods to the named destination. This means that the buyer assumes all risks and any additional costs until the goods are delivered in this way. However, under the terms of CIP, the seller is also obliged to provide insurance against the risks of loss and damage to the goods during transport in favor of the buyer. Consequently, the seller concludes an insurance contract and pays insurance premiums. The buyer should note that under the terms of the CIP term, the seller is required to provide insurance with a minimum coverage1.
In the event that the buyer wishes to have insurance with greater coverage, he must either specifically agree on this with the seller, or himself take steps to conclude additional insurance. The word “carrier” means any person who, on the basis of a contract of carriage, undertakes to provide for himself or organize the transport of goods by rail, road, air, sea and inland water transport or a combination of these modes of transport.
In the case of carriage to destination by several carriers, the transfer of risk will occur when the goods are placed in the care of the first carrier. Under the terms of the CIP term, the seller is responsible for clearing the goods for export. This term can be used when transporting goods by any mode of transport, including multimodal transport.

CPT
CARRIAGE PAID TO

CIF
COST, INSURANCE AND FREIGHT

The term “Cost, Insurance and Freight” means that the seller has delivered when the goods have passed the ship’s rail at the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination, but the risk of loss or damage to the goods, as well as any additional costs incurred after the goods have been shipped, is transferred from the seller to the buyer. However, under the terms of the CIF term, the seller is also obliged to purchase marine insurance in favor of the buyer against the risk of loss and damage to the goods during transport.
Therefore, the seller is obliged to conclude an insurance contract and pay insurance premiums. The buyer should take into account that under the terms of the CIF term, the seller is required to provide insurance with only minimal coverage1. In the event that the buyer wishes to have insurance with greater coverage, he must either specifically agree on this with the seller, or himself take steps to conclude an additional about insurance. Under the terms of the CIF term, the seller is responsible for clearing the goods for export. This term can only be used when goods are transported by sea or inland waterways. If the parties do not intend to deliver the goods across the ship’s rail, the term CIP should be used.

CFR
COST AND FREIGHT b>)

The term “Cost and Freight” means that the seller has delivered when the goods have passed the ship’s rail at the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination, HOWEVER, the risk of loss of or damage to the goods, and any additional costs incurred after the goods have been shipped, is transferred from the seller to the buyer. Under the terms of the CFR term, the seller is responsible for clearing the goods for export. This term can only be used when goods are transported by sea or inland waterways. If the parties do not intend to deliver the goods across the ship’s rail, the term CPT should be used.

FOB
FREE ON BOARD (FREE BOARD)

The term “free on board” means that the seller has delivered when the goods have passed the ship’s rail at the named port of shipment. This means that from now on, all costs and risks of loss or damage to the goods must be borne by the buyer. Under the FOB term, the seller is responsible for clearing the goods for export. This term can only be used when goods are transported by sea or inland waterways. If the parties do not intend to deliver the goods across the ship’s rail, the FCA term should be used.

FAS
FREE ALONGSIDE SHIP (FREE ALong BOARDS< b> SHIP)

The term “Free Alongside Ship” means that the seller has made delivery when the goods are placed alongside the ship on the quay or in lighters at the named port of shipment. This means that from now on, all costs and risks of loss or damage to the goods must be borne by the buyer. Under the terms of the PAS term, the seller is responsible for clearing the goods for export. THIS EDITION DIFFERS IN THIS EDITION FROM PREVIOUS EDITIONS OF INCOTERMS IN WHICH THE RESPONSIBILITY FOR CUSTOMS CLEARANCE FOR EXPORT IS RESPONSIBLE TO THE BUYER. However, if the parties wish the buyer to assume the responsibility for clearing the goods for export, this should be clearly stated in the relevant addendum to the contract of sale1. This term can only be used when goods are transported by sea or inland waterways.

FCA
FREE CARRIER

The term “Free Carrier” means that the seller will deliver the cleared goods to the carrier named by the buyer at the named place. It should be noted that the choice of place of delivery will affect the obligation to load and unload the goods at that place. If delivery takes place at the seller’s premises, the seller is responsible for shipping. If the delivery is made to another place, the seller is not responsible for the shipment of the goods. This term can be used for transportation by any mode of transport, including multimodal transport. The word “carrier” means any person who, on the basis of a contract of carriage, undertakes to carry out or procure the carriage of goods by rail, road, air, sea or inland water transport, or a combination of these modes of transport. If the buyer trusts another person who is not a carrier to accept the goods, then the seller is considered to have fulfilled his obligations to deliver the goods from the moment of its transfer to this person.

EXW
EX WORKS (FREE FACTORY)

The term “Ex works” means that the seller is deemed to have fulfilled his obligation to deliver when he places the goods at the disposal of the buyer at his premises or at another named place (for example, plant, factory, warehouse, etc.). The seller is not responsible for loading the goods onto the vehicle, as well as for customs clearance of the goods for export. The term thus imposes minimal obligations on the seller and the buyer must bear all costs and risks in connection with the carriage of the goods from the seller’s premises to the destination. However, if the parties wish the seller to take over the responsibility for loading the goods at the place of dispatch and bear all the risks and costs of such loading, this should be clearly stated in the relevant addendum to the contract of sale1. This term cannot be applied when the buyer is unable to comply directly or indirectly with the export formalities. In this case, the term FCA should be used, provided that the seller agrees to bear the costs and risks for shipping the goods.

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