Incoterms

The rules of delivery forms, called incoterms, were first introduced in 1936. International Chamber of Commerce (ICC) determined by. Incoterms are updated periodically according to needs; It was last updated on January 1, 2020.

EXW – EXWORKS

EXW delivery method, in the simplest sense, is that the exporter company delivers the goods purchased in its own commercial enterprise to the carrier determined by the importer.

All costs and risks that may arise at the exporter's door, such as domestic transportation, loading, export customs clearance costs, freight (international transportation fees), insurance costs, unloading costs, import customs clearance costs in the exporting country belong to the buyer (importer).

FCA – FREE CARRIER (Delivered to the carrier at the designated place)

​It is the type of sale in which the exporter company is obliged to deliver the goods to the carrier company determined by the buyer (importer) at the mutually agreed place, with export customs clearance done.

The exporter company delivers the goods to the importer's carrier by paying the export customs clearance costs and the internal transportation fee, if any, to the place of delivery. In international trade, the party that will pay the shipping fee has the right and responsibility to choose the carrier. For this reason, in FCA, the shipper is usually an institution determined by the importer (buyer). In case of need, the exporter may designate a company to assist the importer, provided that the transport fee belongs to the importer.

The importer company should be aware that it bears all costs such as international transportation fee (freight), insurance, unloading when it arrives in its own country, customs duty, domestic transportation of the goods delivered to the carrier.

FAS – FREE ALONGSIDE SHIP (Delivery Alongside the Ship at Exit)

It means that the exporter delivers the goods subject to sale at the port where the agreed ship berths on the specified date. Expenses up to the port, inland transportation fee in the exporting country are covered by the exporting company.

All expenses after the port delivery, such as the export loading cost and risk at the port, the freight to be paid to the carrier (international transportation fee), belong to the importer.

In the FAS delivery method, the exporter brings the goods to the port of departure, pays the inland transportation fee in her own country, brings the goods to the port and carries out customs clearance and delivers them to the carrier determined by the importer.

FOB – FREE ON BOARD (Delivery on Ship at Exit)

It is a form of delivery that means that the exporter company ensures that the goods within the scope of the contract are loaded on the ship at the specified date and port, and that it undertakes all the costs and risks that will arise up to this point.

In the form of FOB delivery, the exporter basically covers the inland transportation fee between his company and the port, the customs clearance and loading costs at the port. The importer company is deemed to have undertaken the freight fee and the costs of insuring the goods against the risks related to international transportation.

CFR – COST AND FREIGHT (Freight Paid On Board Delivery)

It is a form of delivery based on the principle that the exporter company brings the goods within the scope of the sales contract to the port of departure, clears it, loads it on the ship and pays the transportation fee up to the port of destination. It is the importer's responsibility to insure the goods against any damage that may occur during transportation.

CFR delivery method is used only in maritime transportation, according to the issues determined in the INCOTERMS bulletin prepared by the International Chamber of Commerce. In other transportation types such as airway, road and railway, it is essential to use the CPT delivery method given below.

CIF – COST, INSURANCE AND FREIGHT (Freight and Insurance Paid On Board At Exit)

It means that the exporter brings the exported goods to the port of departure and loads them on the ship by customs and undertakes the insurance cost as well as the shipping fee to the port of destination.

The CIF delivery method is often misunderstood in the market and is the most controversial form of delivery. In this form of delivery, the exporter pays the freight of the goods loaded on the ship to the destination port and also takes out the insurance himself. However, paying the freight and taking out the insurance does not mean that the place of delivery is the country of destination. The exporter has only undertaken the cost of these processes and has followed a pricing policy accordingly from the beginning.

For this reason, in the agreements made on the CIF delivery method, the importer company should be very careful and be aware that the risk on itself is insured by the exporter. Therefore, it is useful to warn the exporter to take out an insurance that covers all risks.

CPT – CARRIAGE PAID TO… (Freight Paid to Destination)

It means that the exporter company delivers the goods to the transporter at the exit by customs clearance and loading, with the freight paid, until the specified destination.

The basic logic and operation of the CPT delivery form is actually not different from the CFR at all. The only difference is that this delivery method is used in air, road and railway. According to this issue, which is little known in the market but should be known in law, the CFR delivery method is used only in sea transportation, and CPT is used in other transportation types.

CIP – CARRIAGE AND INSURANCE PAID TO… (Freight and Insurance Paid to the Determined Place)

It is a form of delivery based on the principle that the exporter company delivers the goods to the transporter by loading the goods with the freight paid and insured up to the designated destination.

CIP delivery method is similar to CIF in terms of basic logic and operation. However, CIF is used in maritime transport, while CIP is used in other modes of transport (air, land, sea). We see that this issue is also neglected and unknown in the market.

DAP – DELIVERED AT PLACE

It is a form of delivery, which means that the goods are unloaded by the exporter company and delivered on behalf of the buyer at a point agreed in the importing country.

In the DAP delivery form, the place of delivery is not necessarily the buyer's warehouse, but any agreed point, any place.

DPU – (DELIVERED AT PLACE UNLOADED) – Unloaded delivery at the specified point

After loading the goods and passing them through the customs of their own country, the exporting company unloads them at the destination (port, warehouse, logistics terminal, or the importer's warehouse). Customs clearance, customs duty and other costs in the importer's country belong to the importer.

The DPU delivery mode can be used in all modes of transport. Transport costs belong to the seller. There is no obligation to have insurance.

DDP – DELIVERED DUTY PAID (Delivery to Importer's Warehouse with Customs Duty Paid)

It is a form of delivery based on the responsibility of the exporter company to take it to the warehouse of the importer at the designated address with the import customs duties paid.

When viewed within the framework of market habits, the place of delivery is usually determined as the address of a warehouse or warehouse determined in the workplace or country of the importer, and in this case, the DDP delivery method is almost the opposite of the EXW delivery method.