Delivery Terms – Incoterms

FOB – Free on Board (On Board Delivery)

FOB (Free on Board), under Incoterms 2020, is a delivery method used exclusively for sea and inland waterway transport and is one of the most preferred and widely known methods in international trade. In this method, the seller bears all costs, risks, and responsibilities until the goods are loaded onto the vessel specified by the buyer at a designated port in the seller’s country. Once the loading is completed—when the goods are placed on the ship’s deck or in its hold—all risks and costs are automatically transferred to the buyer. Thus, after the loading process, the seller is relieved of all obligations. FOB is especially prominent in international shipments where the importer wants to control logistics processes and arrange freight and insurance according to their own preferences.

What is FOB Delivery and How Is It Applied?

Under FOB, the exporter completes customs clearance and brings the goods from their warehouse to the port, then loads them onto the vessel specified by the buyer. The physical loading of goods onto the ship is a critical step because the risk passes to the buyer not when the goods are on the dock or pier, but once they are loaded onto the vessel. From the moment the ship sets sail, the buyer is responsible for all freight, insurance, handling, unloading, customs clearance, and transport costs at the destination port. The seller, however, remains responsible for inland transport, port charges, customs fees, and loading the goods onto the ship. FOB is frequently used in sectors requiring large-volume and maritime logistics. The clear division of responsibilities and costs between the seller and buyer makes FOB a globally accepted standard in international trade.

The Importance of FOB in Export

What Are the Advantages of FOB Delivery?

Main Differences Between FOB and CIF

How Is FOB Pricing Done?

When forming an FOB price, the seller calculates and includes all costs such as product manufacturing, packaging, inland transport, port operations, loading fees, and export customs costs. After bringing the goods to the port and completing all preparations, the seller loads them onto the vessel, fulfilling their responsibility. The buyer covers all costs related to freight, insurance, and import procedures from this point on. In FOB quotations, the exact name of the loading port (such as “FOB Istanbul,” “FOB Rotterdam”) must be clearly indicated. Otherwise, ambiguities regarding the place of delivery can lead to delays and additional costs.

Responsibilities of the Seller and Buyer in FOB Delivery

Required Documents for FOB Delivery

Frequently Asked Questions About FOB

• When does risk transfer in FOB delivery? – The risk and responsibility transfer to the buyer when the goods are loaded onto the vessel. The moment of loading should be clearly shown in the bill of lading and carrier statement.
• Who is responsible for freight and insurance in FOB delivery? – All freight and insurance arrangements after loading are the buyer’s responsibility. The seller is only responsible up to the loading.
• Which modes of transport can FOB be used for? – FOB is only valid for sea and inland waterway transport. For other modes, different Incoterms should be used.
• What should be included in an FOB price offer? – The loading port, vessel information, delivery date, and other critical details must be fully specified in the contract.

"FOB clarifies risk and cost allocation in exports, providing a safe and transparent model for both sellers and buyers. The exporter’s responsibility is up to the ship; the importer covers the rest of the process."

FCA – Free Carrier (Carrier Delivery) Delivery Term

FCA (Free Carrier) is a highly flexible and widely used Incoterms 2020 delivery term in export and import operations. With FCA, the seller delivers the goods to a carrier or another party nominated by the buyer at a specified location (such as a port, airport, warehouse, or the office of a freight company). At the moment of delivery, all risks and responsibilities pass to the buyer. FCA is compatible with multimodal transport (road, air, sea, rail).

What is FCA Delivery and How Does It Work?

Under FCA, the seller delivers the goods either at their own facility (e.g., factory, warehouse) or at another agreed location to the nominated carrier. If the carrier collects the goods at the seller’s premises, the seller is responsible for loading. If another delivery point is chosen, transporting the goods there and handing them over is the seller’s responsibility. Upon delivery, all risk, cost, and responsibility fully transfer to the buyer.

Advantages and Disadvantages of FCA Delivery

FCA (Free Carrier) delivery provides numerous advantages to both exporters and importers, mainly due to its flexibility and suitability for all transport modes. One of FCA’s key benefits is that the delivery point can be freely determined. The seller may deliver goods at their own premises or at a port, warehouse, or freight company office. This allows both parties to select the delivery location that best suits the complexity of their logistics chain and organizational capacity. FCA is especially practical in e-export, multimodal transport, or chain logistics operations.

FCA stands out for its ability to be used in any transport mode—road, sea, air, or rail. This allows exporters and importers to organize their international shipments in the most cost-effective and efficient way. In addition, once the seller delivers the goods to the carrier, they are relieved of all risks and costs; thus, any delays, losses, or extra costs at ports, warehouses, or transshipment points are fully the buyer’s responsibility. This enables the seller to avoid uncertainties in later stages of the process and to manage their financial planning more securely.

For the importer, FCA’s key advantage is the ability to directly arrange transport and insurance based on their own preferences. The buyer can configure the logistics chain according to their own network, control costs directly, and strengthen their bargaining position. FCA is especially advantageous for importers wishing to work with different logistics partners or organize consolidated shipments. Clear determination of the delivery point and time also helps both seller and buyer avoid surprises during the process.

In summary, FCA is a flexible and modern model where risk and cost are clearly transferred from the moment of delivery. However, both parties must fully understand their responsibilities, and the delivery point and time should be clearly specified in the contract to prevent potential disputes.

Differences Between FCA, FOB, and DDP

How Are FCA Costs Calculated?

In FCA quotations, the seller covers all costs up to the delivery point, including production, packaging, inland transport, and export customs clearance. The buyer pays for main transport, insurance, import customs, and costs at the destination. All cost items should be clearly defined in the contract.

• Seller: Production, packaging, inland transport, delivery point costs, export customs clearance.
• Buyer: Main transport, insurance, import customs, transfer costs at destination.

Division of Responsibilities in FCA

When Is an FCA Contract Used?

FCA is preferred particularly for multimodal shipments, when there are several transshipment or intermediary points in the transport process, or when the goods are to be delivered to a logistics company or carrier. In modern export and e-export processes, FCA is advantageous for all transactions requiring fast delivery.

"FCA stands out as a modern delivery term for flexible deliveries and risk management in today’s evolving logistics processes."

Taxation in FCA Delivery

In FCA transactions, export tax, VAT exemption, or incentives usually apply according to the seller’s country laws. The buyer is responsible for taxes and duties incurred in the country of import. All tax and legal processes must be clearly defined in the contract.

Frequently Asked Questions About FCA

• When does risk transfer in FCA? – When the goods are delivered to the carrier or specified location.
• What advantages does FCA offer over FOB? – FCA is usable in multimodal shipments and is more flexible.
• Why is the delivery point important in FCA contracts? – Misidentification can cause extra costs and responsibility issues.
• Who arranges insurance in FCA delivery? – Insurance is not mandatory and is usually arranged by the buyer.
• How does FCA compare to DDP? – In DDP, all costs are borne by the seller; in FCA, up to the carrier by the seller, after that by the buyer.

EXW – Ex Works (At the Workplace Delivery) Delivery Term

EXW (Ex Works) is one of the simplest Incoterms 2020 delivery terms in international trade, providing the least risk and responsibility for the seller. In this model, the seller makes the goods available to the buyer at their factory, warehouse, workshop, or another agreed location on the specified date, and notifies the buyer accordingly. The seller’s only duty is to have the goods ready and inform the buyer; all further processes such as transport, loading, customs, and insurance are the sole responsibility of the buyer.

The EXW term is especially used for micro-export, sample shipments, or cases where the buyer wants to manage the entire logistics operation. The buyer (or their logistics agent) comes to the seller’s premises to pick up the goods and arranges the loading. From that point forward, all costs and responsibilities—including the provision of transport vehicles, loading, insurance, export/import customs procedures, shipment, unloading at the destination country, and all related processes—are fully transferred to the buyer.

In practice, EXW is usually preferred by major importers or companies experienced in international transportation, as they possess robust logistics networks in both countries and can often organize transport and insurance at lower costs. Also, for companies needing rapid action in trade or full control over delivery, EXW is a convenient model.

However, the place and time of delivery under EXW must be detailed in the contract, and both parties should be transparently informed about the process. Otherwise, problems during loading or transport, as well as ambiguity in responsibility, may lead to commercial disputes. In summary, EXW offers the seller minimum responsibility and gives the buyer maximum control and freedom, but requires strong experience in logistics and legal processes from the buyer.

What is EXW Delivery and What Is Its Purpose?

In EXW, the seller simply prepares the goods and notifies the buyer. The buyer collects the goods from the seller’s facility using their own means and manages all transport, insurance, export, and import processes. EXW is frequently chosen for buyers with a strong logistics network in their own country or for sample/test shipments.

Advantages and Disadvantages of EXW

The EXW (Ex Works) delivery term stands out as it provides sellers with minimum operational obligations and risk. The seller’s only responsibility is to make the goods available at their premises, and after this point, all further processes are managed by the buyer. This allows sellers, especially those with limited export experience or small-scale firms that wish to avoid risks, to focus more on their own production and business processes. EXW is also attractive for buyers with strong logistics networks and the ability to effectively manage their own shipping and customs processes.

Another advantage of EXW is the extreme clarity and simplicity of price and responsibility sharing. The seller has no obligation beyond making the goods available at the factory, warehouse, or workplace—no shipping or export documentation is required. This protects the seller from unexpected export delays, customs costs, or logistics problems. On the buyer’s side, they can organize their own logistics freely: choose their own shipping routes, logistics companies, and insurance policies, and maintain full control over the process. For major global importers, this means greater operational flexibility and cost advantage.

However, EXW also brings certain disadvantages and requires caution. The buyer, taking on almost all logistics and legal responsibilities, may encounter substantial risks if inexperienced or unfamiliar with local regulations. The buyer must also manage all steps including transport, customs, insurance, and sometimes even export customs clearance (which, in many countries, can only legally be done by the seller, requiring special arrangements between the parties). If the contract does not clearly specify the place, timing, and documentation, the process may be hampered by confusion and disputes.

Additionally, the buyer may face extra costs and unexpected operational challenges while managing loading, shipping, insurance, and customs in EXW deliveries. If the buyer does not have reliable logistics partners or experience in the seller’s country, collecting, shipping, and importing the goods may be difficult and more expensive than expected. For these reasons, EXW is best suited for buyers capable of efficiently managing all processes, familiar with international logistics and customs; otherwise, other Incoterms with shared responsibilities are preferable.

Differences Between EXW and FOB Delivery

EXW Pricing and Insurance Responsibility

In an EXW price quote, the seller includes only the product cost and the cost of making it available at their premises; all other costs are left to the buyer. Insurance is not required, but the buyer may arrange insurance on their own if they wish. This allows for clear cost separation.

• Seller: Production, making the goods available at their premises.
• Buyer: Loading, transport, insurance, customs, import operations, and all other costs.

Who Prepares Customs Documents Under EXW?

In EXW, export customs procedures are entirely the buyer’s responsibility. The seller is not obliged to prepare any documents; however, in many countries export customs clearance can only be performed by the seller, so special agreements may be necessary.

Frequently Asked Questions About EXW

• When does risk transfer in EXW? – When the goods are handed over to the buyer at the seller’s premises.
• Is transport and insurance required under EXW? – No, this is entirely at the buyer’s discretion.
• What documents must the seller provide under EXW? – Legally, none; only the basic commercial invoice and product documentation.
• Who is EXW suitable for? – Buyers with logistics experience who can manage all processes themselves.

"Success in EXW deliveries depends greatly on the buyer’s knowledge, experience, and organizational skills."

CIP – Carriage and Insurance Paid To

CIP (Carriage and Insurance Paid To) is a modern delivery term under Incoterms 2020, offering significant advantages to both sellers and buyers and usable in all modes of transport. With CIP, the seller is obliged to deliver the goods to a specified carrier or another party at an agreed location and to pay for the transportation cost (freight) and minimum insurance up to the named place of destination. This way, the buyer is protected by international cargo insurance against loss, damage, or similar risks during transit.

The flexibility of CIP makes it especially preferable in intercontinental trade, multi-modal logistics chains, or business relationships requiring risk division. Although risk passes to the buyer after the goods are delivered to the carrier, the seller remains responsible for transport and insurance costs up to the destination. This allows the buyer to receive the goods with lower risk and more predictable costs. The seller is required to arrange at least a minimum insurance policy as specified in the contract and to pay for the freight. Since CIP can be used for all transport types—road, air, sea, or rail—it is particularly effective for exports involving different countries or continents.

Unlike classic maritime terms (such as CIF), CIP is notable for having no limitation on the mode of transport and for mandating at least the minimum level of insurance as per international standards. The scope of insurance is generally set to at least 110% of the invoice value of the goods and must comply with ICC Cargo Clauses (A) conditions. This ensures a secure trade environment for the buyer. At the same time, the seller is able to ship their goods smoothly across multiple transport networks, transfer points, and complex logistics scenarios.

In summary, CIP – Carriage and Insurance Paid To is a delivery term where the risk and cost are clearly divided: the seller is responsible up to a certain point, after which the buyer takes over. It offers safety and operational flexibility in global trade. However, the contract must clearly state the delivery point, carrier, and insurance details. When used correctly, CIP provides commercial security and financial predictability for both seller and buyer.

What is CIP Delivery?

In CIP delivery, the seller is obliged to deliver the goods to the carrier or another agreed person and pay for both the freight and the minimum insurance up to the named destination. When the goods are delivered to the carrier, risk transfers to the buyer, but the transport and insurance costs up to the destination remain the seller's responsibility. CIP is ideal for international trade where security is prioritized and the buyer seeks to limit their risk.

How Does the CIP Process Work?

In CIP, the seller delivers the goods to the carrier or another agreed place, arranges the freight and insurance contracts, and provides the necessary documents. Once delivered to the carrier, the risk transfers to the buyer. However, the insurance remains valid up to the named destination for any loss or damage that may occur. CIP ensures a clear division of responsibility from the start to the end of the shipment.

Advantages and Disadvantages of CIP

Differences Between CIP, CIF, and CPT

CIP Costs and Insurance Details

When preparing a CIP quote, the seller includes the product price, inland transport, main transport (freight), insurance, and all costs up to the destination. The insurance must be at least 110% of the invoice value and meet international cargo requirements. If the buyer requires additional insurance, this must be arranged separately and at extra cost.

• Seller: Product, loading, main transport, insurance, and shipping documents.
• Buyer: Unloading at destination, import taxes, local transport, and extra insurance if requested.

Frequently Asked Questions About CIP

• When does risk transfer in CIP? – When the goods are delivered to the carrier, risk transfers to the buyer.
• What is the main difference between CIP and CPT? – In CIP, insurance is the seller’s responsibility; in CPT, insurance is the buyer’s responsibility.
• How is insurance coverage defined in a CIP contract? – The seller must provide at least minimum international insurance (ICC A).
• What transport modes can CIP be used for? – It can be used for road, air, sea, and rail shipments.
• Can the seller provide additional insurance? – Yes, if the buyer requests it and pays the extra cost.

"CIP is one of the most secure delivery terms in modern logistics, optimizing the sharing of responsibility and cost between seller and buyer."

CFR – Cost and Freight

CFR (Cost and Freight) is a delivery term under Incoterms 2020 in which the seller pays for all costs and freight to bring the goods to the designated port of destination. However, the risk transfers to the buyer as soon as the goods are loaded onto the vessel. CFR is used only in sea and inland waterway transport.

What is CFR Delivery?

In CFR delivery, the seller loads the goods onto the vessel at the port in their own country, arranges the freight contract, and pays the transportation costs. However, the moment the goods are loaded onto the vessel, all risk and responsibility are transferred to the buyer. All costs for unloading at the destination port, import, and any additional charges belong to the buyer.

Main Features of CFR

Differences Between CFR, FOB, and CIF

Seller’s and Buyer’s Responsibilities in CFR Delivery

CFR Documents and Risk Sharing

Points to Consider When Using CFR

• Port Details: Both the port of shipment and the port of arrival must be clearly stated in the contract.
• Insurance: The seller does not provide insurance; the buyer should arrange it if needed.
• Risk Transfer: Since the risk passes when goods are loaded onto the vessel, the seller is not responsible for any damages after this point.

Frequently Asked Questions About CFR

• When does the risk transfer to the buyer in CFR? – When the goods are loaded onto the vessel.
• What is the main difference between CFR and CIF? – Under CIF, the seller is obliged to arrange insurance; under CFR, insurance is not the seller's responsibility.
• Which costs does the seller cover under CFR? – Only transport to the export port and freight to the port of destination.
• Which modes of transport can CFR be used for? – Only for sea and inland waterway transport.
• What happens if the buyer does not arrange insurance? – The buyer is fully responsible for any loss or damage after loading onto the vessel.

"CFR is an important delivery term for companies seeking cost predictability and simple risk management in maritime transport."

CIF – Cost, Insurance, Freight

CIF (Cost, Insurance, Freight) is a delivery term used exclusively in sea and inland waterway transport, where the seller is responsible for the cost of transporting goods to the designated port of destination, the freight charges, and the minimum insurance premium. Under CIF, risk transfers to the buyer when the goods are loaded onto the vessel, but transportation and insurance costs continue to be covered by the seller until the arrival port.

What is CIF Delivery?

CIF delivery is one of the most preferred terms in international trade. The seller loads the goods onto the vessel, arranges both the freight and insurance contracts. Although risk transfers to the buyer when loading is complete, the insurance policy protects the buyer against any loss or damage that may occur during sea transport. With CIF, both seller and buyer have clearly defined responsibilities.

Benefits and Applications of CIF

Differences Between CIF and Other Delivery Terms

CIF Pricing and Customs Duties

In CIF pricing, the seller includes the cost of goods, loading charges, freight, and insurance premium. The seller is responsible for transportation and insurance up to the destination port. Import customs duties and local charges at the arrival port are the buyer's responsibility. In customs procedures, the declared CIF value is usually used for calculating import taxes.

• Seller: Production, loading, freight, insurance, and export documents.
• Buyer: Unloading at the arrival port, import taxes, and additional local costs.

Frequently Asked Questions About CIF

• When does risk transfer to the buyer under CIF? – When the goods are loaded onto the vessel.
• What does CIF insurance cover? – The seller must provide at least a minimum ICC A or equivalent insurance policy.
• How is the CIF price determined? – By adding freight and insurance costs to the value of the goods.
• When is CIF suitable? – When the buyer does not want to deal with freight and insurance arrangements.
• What obligations remain for the buyer under CIF? – Unloading, customs duties at the destination, and collecting the goods from the port.

"CIF is one of the most popular maritime delivery terms, where risk passes early to the buyer but cost and logistics remain with the seller until arrival port."

DAP – Delivered At Place

DAP (Delivered At Place) is a widely used delivery term under Incoterms 2020, where the seller is responsible for delivering the goods to a specified address in the buyer’s country. Under DAP, the seller undertakes all export and transportation processes up to the delivery point, but import procedures and associated taxes are the buyer’s responsibility.

What is DAP Delivery?

In DAP delivery, the seller brings the goods to the specified address in the destination country and delivers them. Unloading and import customs procedures belong to the buyer. All transportation, export, overseas freight, and logistics up to the point of delivery are managed by the seller.

How Does the DAP Process Work?

The seller prepares the goods at their facility, completes export customs procedures, and manages the entire transport process up to the specified delivery address. Once the goods reach the final destination, the buyer is responsible for import customs clearance and unloading. Delivery is considered complete when the goods arrive at the agreed address.

DAP Pricing and Obligations

In DAP pricing, the seller bears all costs up to the delivery address, including production, local transport, export customs, international freight, and any additional costs incurred until delivery. The buyer is responsible for import duties, local customs charges, and unloading at the destination.

Differences Between DAP, EXW, DDP, and DES

Frequently Asked Questions About DAP

• When does risk transfer under DAP? – When the goods arrive at the agreed address, risk passes to the buyer.
• What is the main difference between DAP and DDP? – Under DDP, the seller is responsible for import duties and customs; under DAP, this is the buyer’s responsibility.
• Which transport modes are possible with DAP? – All types (road, sea, air, rail) are possible.
• Who unloads the goods in DAP delivery? – The buyer is responsible for unloading at the place of delivery.
• Is insurance mandatory in DAP? – Insurance is not required, but either party may obtain additional coverage for extra security.

"DAP provides flexible and fast solutions for both buyers and sellers seeking convenience in international trade."

CPT – Carriage Paid To

CPT (Carriage Paid To) is an Incoterms 2020 delivery term where the seller pays the transport cost to deliver the goods to the agreed destination. CPT can be used in all modes of transport and is especially advantageous for logistics involving multiple transportation methods. The seller arranges and pays for transportation, but risk transfers to the buyer as soon as the goods are handed over to the carrier.

What is CPT Delivery and How Does It Work?

In CPT, the seller delivers the goods to the carrier either at their own premises or another agreed location. At the moment of delivery to the carrier, risk passes to the buyer; however, transportation costs to the final destination remain with the seller. CPT offers flexibility in international trade, clearly splitting risk and cost at different points in the transport chain.

Comparison of CPT with DAP, FCA, and CIF

CPT Pricing and Costs

When determining the CPT price, the seller adds all transport costs from their premises (or other agreed point) to the destination to the product price. Unloading, import taxes, and all costs arising in the destination country are paid by the buyer. Delivery and arrival points must be defined precisely in CPT contracts.

Seller’s and Buyer’s Responsibilities in CPT

Frequently Asked Questions About CPT Delivery

• When does risk transfer in CPT? – When the goods are delivered to the carrier.
• Is insurance mandatory in CPT? – No, it is at the buyer’s discretion.
• Which modes of transport can CPT be used for? – Road, air, sea, rail, and multimodal transport.
• What is the main difference between CPT and CIF? – In CIF, insurance is arranged by the seller; in CPT, it is the buyer’s responsibility.
• Why are delivery and arrival points important in CPT? – To ensure clarity in the transport chain and to avoid disputes over cost allocation.

"CPT provides operational flexibility and cost advantages for both seller and buyer in international trade."

FAS – Free Alongside Ship

FAS (Free Alongside Ship) is a delivery term under Incoterms 2020, used exclusively in sea transport. The seller is responsible for bringing the goods alongside the vessel (at the quay or on a barge) at the designated port. Once the goods are placed next to the ship, all risks and costs transfer to the buyer.

What is FAS Delivery?

In FAS delivery, the seller places the goods alongside the vessel at the port; loading, freight, and insurance arrangements are the buyer’s responsibility. Export customs clearance is handled by the seller. FAS is preferred especially for bulk cargoes, such as grain, coal, or large commodities.

Advantages and Disadvantages of FAS

Differences Between FAS, FOB, and CFR

Required Documents for FAS Delivery

Frequently Asked Questions About FAS

• When does risk transfer to the buyer in FAS? – When the goods are delivered alongside the vessel.
• What types of transport is FAS used for? – Only for sea and inland waterway transport.
• What is the main difference between FAS and FOB? – Under FAS, loading costs are the buyer’s responsibility; under FOB, they are the seller’s responsibility.
• Does the seller have customs responsibility in FAS? – Yes, the seller is responsible for export customs procedures.
• Is insurance required in FAS? – No, it is optional and the buyer’s decision.

"FAS simply divides risks and responsibilities by transferring goods at the port, alongside the vessel, in maritime trade."