International shipping comes with plenty of terminology, and understanding who is responsible for each stage of a shipment can sometimes be confusing.
Terms such as EXW, FOB, CFR, CIF and DDP are commonly used when businesses purchase or sell goods internationally.
These are known as Incoterms, and they help define the responsibilities of buyers and sellers for transport, costs, risk and certain customs formalities.
For Australian SMEs, understanding these terms is an important part of planning international freight.
What Do These Shipping Terms Mean?
Here are some commonly used Incoterms:
- EXW (Ex Works): The seller makes the goods available at an agreed location, with most transport arrangements and responsibilities falling to the buyer.
- FOB (Free on Board): For sea freight, the seller delivers the goods on board the vessel at the agreed port of shipment.
- CFR (Cost and Freight): The seller pays for freight to the named destination port, while risk generally transfers when the goods are loaded on board at origin.
- CIF (Cost, Insurance and Freight): Similar to CFR, but the seller must also arrange the required level of cargo insurance.
- DDP (Delivered Duty Paid): The seller takes responsibility for delivering the goods to the named destination, including applicable import clearance and duties.
Choosing the right Incoterm helps businesses understand what is included in their purchase or sales agreement and which logistics arrangements still need to be organised.
One Logistics Partner. From Pickup to Delivery.
Whatever Incoterm your shipment operates under, Flying Fox Solutions can help coordinate the freight services you are responsible for.
Our end-to-end logistics solutions can include supplier pickup, origin transport, freight bookings, international shipping, documentation, customs coordination and final delivery.
We work with Australian importers and exporters to make international freight easier to manage, with one point of contact throughout the shipment.
Not sure which shipping arrangements you need? Talk to Flying Fox Solutions and let us help coordinate your next shipment from origin to doorstep.
Source: International Chamber of Commerce (ICC) – Incoterms® 2020 Rules.
Disclaimer – Market data is from public sources we consider reliable but has not been independently verified; accuracy is not guaranteed