SHIPPING INCOTERMS
A Complete Guide to 11 Incoterms
DDP Incoterms (Delivered Duty Paid): The seller does it all, delivery and customs, with no risks or extra costs for the buyer.
DAP Incoterms (Delivered at Place): The seller delivers to a spot the buyer chooses. When it’s time to unload, the buyer takes over.
DDU Incoterms(Delivery Duty Unpaid): an older term in the Incoterms lineup, sets out a deal in which the seller covers transport costs and all risks involved in transferring the goods. However, the tab for import duties, taxes, and extra delivery costs inside the destination country goes on the buyer’s shoulders.
DPU Incoterms (Delivered at Place Unloaded): It’s similar to DAP, but the seller also handles the unloading.
FOB Incoterms (Free on Board): The seller puts the goods on the ship, and the rest of the responsibilities are on the buyer’s end.
EXW incoterms (Ex Works):The buyer takes on the complete handling responsibility, including shipping the goods from the seller’s place to the final destination.
FAS Incoterms (Free Alongside Ship): The seller places the goods by the ship. After that, the buyer is in charge.
FCA Incoterms (Free Carrier): The seller gets the goods to a carrier. After that, it’s the buyer’s responsibility.
CIF Incoterms (Cost, Insurance, and Freight): It’s similar to CFR, but the seller also handles insurance for the ship’s voyage.
CPT Incoterms (Carriage Paid To): The seller only has to send the goods to a carrier. Once the shipment is handed over to the carrier, everything falls onto the buyer’s shoulders.
CIP Incoterms (Carriage and Insurance Paid To): This is similar to CPT, but the seller also arranges insurance for the journey.
CFR Incoterms (Cost and Freight): The seller loads the goods and pays for their trip to the destination port. Once on the ship, the buyer takes responsibility.
Maritime Freight
These terms define which party (the shipper/consignee or the ocean carrier) is responsible for paying the costs of loading, unloading, and stowing cargo.
- Basic Freight: The base rate for transporting a shipment from the port of origin to the port of destination, excluding all surcharges and accessorial fees.
- Liner Terms (or Hook-to-Hook): The carrier (liner) is responsible for paying all costs associated with loading, stowing, and discharging the cargo.
- F.I. (Free In): The shipper is responsible for the cost of loading the cargo onto the vessel, while the carrier pays for discharging.
- F.I.O.S.T. (Free In, Out, Stowed, and Trimmed): The shipper/charterer is responsible for all costs of loading, discharging, stowing, and trimming (leveling) the cargo.
- F.I.O.S. (Free In, Out, and Stowed): The shipper/charterer is responsible for all costs of loading, discharging, and stowing the cargo.
- F.I.L.O. (Free In, Liner Out): The shipper pays for loading the cargo, and the carrier (liner) pays for the discharging.
- L.I.F.O. (Liner In, Free Out): The carrier (liner) pays for loading the cargo, and the shipper/receiver pays for the discharging.
- F.I.S.L.O. (Free In, Stowed, Liner Out): The shipper is responsible for both loading and stowing the cargo, while the carrier pays for the discharging.
- All-In Freight: A single, consolidated freight rate that includes the basic freight plus all applicable surcharges (such as fuel or currency adjustment factors).
Container Transport
These terms primarily describe the different points of origin and destination for a shipment.
Intermodal Service: A freight movement that uses two or more different modes of transport (like ship, rail, and truck) to move a container from origin to destination.
Door Service: A shipping service where the carrier is responsible for transporting the goods directly from the shipper’s location (the “door”) to the consignee’s final location.
Port Service: A shipping service where the carrier’s responsibility is limited to transporting the goods between the port of origin and the port of destination only.
House to House (or Door to Door): The carrier handles the entire shipment from the shipper’s warehouse or factory (“house”) directly to the receiver’s final warehouse or location (“house”).
House to Pier (or Door to Port): The carrier picks up the shipment from the shipper’s location (“house”) and delivers it to the port of exit (“pier”), where the receiver takes over responsibility.
Pier to House (or Port to Door): The carrier’s responsibility begins at the port of origin (“pier”) and ends with delivery to the receiver’s final location (“house”).
CY (Container Yard): A specific area within a port or terminal where full and empty shipping containers are stored, stacked, and transferred between ships, trucks, and trains.
Container Shipping
FCL (Full Container Load): A type of ocean freight where a single shipper books an entire container for their exclusive use.
LCL (Less than Container Load): A type of ocean freight where a shipper books space within a container, sharing it (and the cost) with other shippers’ goods.
Bill of Lading Surcharges
THC (Terminal Handling Charge): A fee charged by the port terminal for the services of loading or unloading containers from the vessel.
BAF (Bunker Adjustment Factor): A surcharge to compensate the shipping line for fluctuations in the price of the ship’s fuel (also known as “bunker” fuel).
CAF (Currency Adjustment Factor): A surcharge to protect the carrier from losses caused by fluctuating currency exchange rates between the freight payment currency and the carrier’s operating cost currencies.
HCS (Hazardous Cargo Surcharge): An extra fee applied for shipping goods classified as hazardous (like chemicals or flammables) to cover the costs of special handling, storage, and documentation.
Documentation and Contracts
Bill of Lading (B/L): A critical legal document issued by a carrier that acts as a receipt for the goods, a contract of carriage, and a document of title (proof of ownership).
Cargo Manifest: A consolidated list of all cargo items loaded onto a vessel for a specific voyage, which is used by customs and port authorities.
DUA / DUIM: A customs declaration document (like the Documento Único Administrativo or Declaración Única de Importación) filed by an importer or exporter to declare goods to national customs authorities.
Shipment Order (S/O): A document issued by the carrier that confirms a shipment booking has been made and space has been reserved on a specific vessel.
Transport / Charter Contract (Charter Party): A legal contract between a shipowner and a hirer (the charterer) that leases the use of the vessel for a specific voyage or period of time.
Actors and Roles
Shipowner: The company or individual who legally owns the merchant vessel.
Carrier / Transporter: The company (often a shipping line or trucker) that signs a contract to transport goods from one point to another.
Customs Broker: A licensed agent who clears goods through customs on behalf of importers and exporters.
Shipping Agent: A company that acts as the local representative for a shipowner or carrier, handling all the vessel’s needs and paperwork while in port.
Port Operator (or Terminal Operator): The company responsible for the day-to-day work of loading and unloading ships at a specific port terminal.
Port Administrator / Port Company (or Port Authority): The governing body (often public or semi-public) that manages the entire port, sets rules, and oversees infrastructure and security.
Port User: Any person or company (like shippers, carriers, or customs brokers) that utilizes the port’s services or facilities.
Services and Fees
Handling / Transfer: The physical service of moving cargo, such as loading, unloading, or transferring it between different modes of transport within a terminal.
Tug / Pilotage: A mandatory service where a local maritime expert (the Pilot) boards a ship to guide it safely into port, often assisted by smaller, powerful boats (Tugs) that push or pull the vessel.
Port Tariffs: The official price list of all fees and dues charged by a port authority for using its facilities and services (like docking, cargo handling, and storage).
Quay / Berth Usage: A specific fee charged to a ship for the time it is tied up alongside the dock (the quay or berth).
