IV Shipping Terms and their Usage

Abstract

This chapter examines the shipping and delivery terms known as Incoterms, which are published by the International Chamber of Commerce. Shipping terms facilitate international commercial transactions by eliminating some of the barriers caused by distance, language, and local business customs. The principal areas that are governed by the Incoterms are risk of loss, delivery obligations, export licenses, custom clearance, and insurance. The Incoterms are grouped into four categories based on the shipper’s obligations. The “E”-term provides for the least amount of obligation placed on the shipper. Accordingly, the “F”-terms, the “C”-terms, and ultimately the “D”-terms increase the obligations placed on the shipper. The FAS (Free Alongside Ship), FOB (Free On Board), CFR (Cost and Freight), and CIF (Cost, Insurance, and Freight) terms are used for sea and inland waterway transport, while the other terms are appropriate for any mode or modes of transport.