What are the Delivery Methods in Exports?
Delivery methods are very important for both buyers and sellers in trade. Because these methods clarify who will pay the fees and who is responsible. There are many delivery methods used in the export world today. It is a great benefit to know these methods before stepping into the trade.
Before explaining the delivery methods in detail, it is worth mentioning one thing. The International Chamber of Commerce (ICC) has defined some rules regarding international trade law. Incoterms contain the rules established by the ICC regarding the transportation and delivery of goods. Incoterms clearly detail the obligations, costs, and risks of both parties. Thus, exporters take these rules into account in their transactions. Now that we have clarified this point regarding the delivery, we can take a detailed look at the delivery methods.
Delivery Types Used for All Modes of Transport
Ex Works (EXW)
In the Ex works method, the seller makes a product available in a specific location. But the buyer is responsible for shipping costs. The buyer is responsible for all the risks that will occur after the payment of the goods. These risks may arise during stages such as loading and transferring to ships or planes. Besides, complying with customs regulations is among the things the buyer should do. Under Ex Works terms, the seller has only one responsibility. It is to ensure that the goods he sells are ready for delivery. So, this method does not require the seller to load the goods on any vehicle.
Carriage Paid To (CPT)
CPT indicates that the seller assumes the risks and costs of delivering the products. They deliver the products to a mutually agreed-upon location. It is the seller’s responsibility to organize the transport to the destination. Yet, the seller is not obligated to insure the goods until they reach the destination. Responsibility for risks does not immediately pass from seller to buyer. After a carrier takes delivery of the goods, the responsibility for the risks passes to the buyer. In other words, the seller insures the products throughout the transit process.
Free Carrier (FCA)
According to the free shipping rules, the seller must deliver the goods to the location determined by the buyer. These locations are diverse. Shipping terminals, airports, or warehouses are among the locations chosen by buyers. The seller adds the shipping costs to the price given to the buyer. Moreover, the seller assumes the risks that may arise until the goods reach the buyer. But after the goods reach the buyer, the buyer becomes responsible.
Delivered at Place (DAP)
In DAP, the seller agrees to pay all costs. Moreover, he is responsible for the damages from the risks that will occur until the goods reach the agreed-upon location. Up to unloading, the seller accepts all risks. The buyer bears the risk and expense of unloading. In this method, the buyer is responsible for import clearance and import duties.
Delivered at Terminal (DAT)
The DAT method requires the seller to organize the carriage. The seller is also responsible for delivering the unloaded goods from the incoming transport vehicle at the specified location. After the products are unloaded, the responsibility for all risks passes to the buyer. The term “terminal” can be any location. As with DAP, the buyer is responsible for import clearance and duties.
Carriage and Insurance Paid To (CIP)
It is the form of delivery in which the exporter pays the transportation fee and insurance costs. However, the fees he pays are the fees that arise up to the point determined in the importer’s country. The seller is responsible for freight and insurance. CIP requires the seller to insure the goods being transported for 110% of the contract value.
Delivered Duty Paid (DDP)
DDP indicates that the seller must take responsibility for transportation until the goods arrive at the specified location. The seller is responsible for the necessary export permits and the accompanying costs. Moreover, customs clearances are among the seller’s concerns. As goods reach the required location and are ready to be unloaded, the buyer assumes the risks. As a result, this method imposes a great responsibility on the seller.
Maritime Delivery Methods
Cost, Insurance, and Freight (CIF)
During the transport process, the seller is responsible for some of the buyer’s costs. These costs are the buyer’s ordering costs, insurance, and freight. But, the responsibility passes to the buyer when the goods reach the destination. After this point, the buyer bears the import and delivery costs. On the other hand, the assumption of risks passes to the buyer as soon as the goods are loaded on the ship.
Free Alongside Ship (FAS)
Under FAS, the seller is responsible for clearing the goods for export. It then places these goods “alongside” the vessel at the specified port. Therefore, the buyer handles loading the goods. Moreover, the buyer has to pay the costs after this stage.
Cost and Freight (CFR)
CFR states that the seller must organize a carriage for the goods to reach the destination point by sea. Furthermore, the seller must present the necessary documents to the buyer. These documents are necessary for the items to be received from the carrier. After the items are loaded onto the ship, the risk passes from the seller to the buyer.
Free on Board (FOB)
Under FOB, the seller has to clear the goods. Also, delivering the goods to the ship is among the seller’s duties. In this process, the seller must make sure that the goods are loaded on the ship. After this stage, the risk assumption passes to the buyer. Also, the buyer bears the costs after this step.
Turkish Goods uses the FOB method as its delivery method. We do our job meticulously and act by the rules of international trade. We make trade safe for both buyers and sellers and reach all over the world. Turkish Goods offers you a perfect, risk-free import process. For an extraordinary import experience, you can contact us here.
