Practical Ecommerce

Exporting Your Products: First Learn The Terminology

To sell products overseas, you will need to learn the international buying and selling terminology, also referred to as “Incoterms 2000” (or, International Commercial Terms). These were first developed in 1936 by the International Chamber of Commerce , which adopted 13 Incoterms to make it easier for international traders to understand one another’s responsibilities when conducting a buy-sell transaction. The following are the 13 Incoterms.

  1. “EXW” – Ex Works (Named Place) – Seller delivers when he or she places the goods at the disposal of buyer at seller’s premises or another named place (i.e. work, factory, warehouse).
  2. “FCA” – Free Carrier (Named Place) – Seller delivers when he or she delivers the goods, cleared for export, to the carrier nominated by buyer at the named place.
  3. “FAS” – Free Alongside Ship (Named Port of Shipment) – Seller delivers when the goods are placed alongside the vessel at the named port of shipment.
  4. “FOB” – Free On Board (Named Port of Shipment) – Seller delivers when the goods pass the ship’s rail at the named port of shipment. Buyer bears all costs and risks of loss or damage to the goods from that point.
  5. “CFR” – Cost And Freight (Named Port of Destination) – Seller delivers when the goods pass the ship’s rail at the named port of shipment. Seller must pay cost and freight to named port of destination. Buyer bears all costs and risks of loss or damage to the goods.
  6. “CIF” – Cost, Insurance and Freight (Named Port of Destination) – Seller delivers when the goods pass the ship’s rail at the named port of shipment. Seller must pay cost, insurance and freight to named port of destination. Buyer bears all costs and risks of loss or damage to the goods.
  7. “CPT” – Carriage Paid To (Named Place of Destination) – Seller delivers when the goods are delivered to the carrier nominated by seller, but he must pay the cost of carriage to bring the goods to the named destination. Buyer bears all risks and any other costs occurring after the goods have been so delivered.
  8. “CIP” – Carriage and Insurance Paid to (Named Place of Destination) – Seller delivers when the goods are delivered to the carrier nominated by seller, but seller must pay the cost of carriage to bring the goods to the named destination. Seller must also pay insurance against the buyer’s risk of loss or damage to the goods during carriage. Buyer bears all risks and any other costs occurring after the goods have been so delivered.
  9. “DAF” – Delivered At Frontier (Named Place) – Seller delivers when the goods are placed at the disposal of buyer on the arriving means of transport not unloaded and cleared for export, but not cleared for import at the named point and place at the frontier, but before the customs border of the adjoining country
  10. “DES” – Delivered Ex Ship (Named Port of Destination) – Seller delivers when the goods are placed at the disposal of buyer on board the ship not cleared for import at the named port of destination.
  11. “DEQ” – Delivered Ex Quay (Named Port of Destination) – Seller delivers when the goods are placed at the disposal of buyer not cleared for import on the quay (wharf) at the named port of destination.
  12. “DDU” – Delivered Duty Unpaid (Named Place of Destination) – Buyer is responsible for paying any “duty” for import in the country of destination. Goods are delivered when seller delivers the goods, not cleared for import and not unloaded from any arriving means of transport, at the named place of destination.
  13. “DDP” – Delivered Duty Paid (Named Place of Destination) – Seller is responsible for paying any “duty” for import in the country of destination. Goods are delivered when seller delivers the goods, not cleared for import and not unloaded from any arriving means of transport at the named place of destination.

Common Price Quotations

Using the definitions above, here are some common price quotations:

  • Price: $18.00 USD Ea. EXW Los Angeles, CA USA
  • Price: $20.00 USD Ea. FOB Port of Long Beach, CA USA (Ocean Freight)
  • Price: $21.50 USD Ea. CIF Dubai, UAE (Ocean Freight)

Hal Selim

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Comments ( 2 )

  1. Legacy User March 13, 2008 Reply

    A really useful article. I've heard many of these terms but was never fully aware of their meaning. Now I can work out what the real cost price is with confidence!
    janet from http://www.equestrian-media.com

    — *Janet H.*

  2. Legacy User April 23, 2008 Reply

    It is enligtened my knowledge I am new to export business this is very usesful and helpful to deal with export business
    Thanks
    Mahesh

    — *mahesh*