CFR (Cost and Freight) / CIF (Cost, Insurance and Freight) –

The above two incoterms are recommended for sea freight transactions only.

The insurance in the CFR term of sale, as well as in the CIF, as well as in the terms of sale FOB mentioned earlier, will be the responsibility of the buyer (upon delivery of the goods on board the ship at the port of export).

As for the responsibility for the various payments in the transaction:

Under the CFR terms of sale, the supplier is obliged to enter the contract of carriage with the sea carrier for the form of carriage to the port of the destination country. Under the terms of the CIF the supplier is obligated to terminate the freight contract and purchase the marine insurance policy for the buyer.

CPT (Carriage Paid To)  / CIP (Carriage and Insurance Paid To)–

Those two terms of sale mentioned above are terms of sale adapted to international trade transactions carried out in all methods of transportation.

The insurance in these two terms, as well as in the FCA terms of sale, will pass from the supplier to the buyer upon delivery of the goods to the seller’s international carrier\freight forwarder, in the exporting country and the receiving of a signed confirmation of delivery.

As for the burden of payments, under the terms of CPT the supplier is obligated to deliver the goods and pay the cost of the main freight up to an agreed point in the country of import (destination), a point which is before the customs post.

On the other hand, in the terms of CIP the supplier is obliged to deliver the goods, pay the cost of the main freight and the cost of marine insurance up to an agreed point before the customs post in the country of import (destination).

DAT (Delivered at Terminal) –

A transaction signed under the DAT terms of sale means that the seller\supplier\factory must make the delivery at a designated and agreed terminal in the destination country, after unloading, but without the obligation to deal with the import customs. The of customs clearance on import applies to the buyer.

DAP (Delivered at Place) –

In a DAP transaction, the seller\supplier is obliged to deliver the cargo at an agreed place in the importing country, including unloading and without the obligation to handle customs clearance. The goods will be delivered on the same means of transportation that brought it.
Unloading of goods and import customs clearance are the responsibility of the buyer.

The sole obligation of the seller\supplier in the country of import is to transport the goods to the agreed named place.

DDP (Delivered Duty Paid) –

This applies to any mode of transport. The seller must deliver the goods to the buyer, cleared for import, and not unloaded at the named place of destination.
The obligation to unload the cargo at its destination will apply to the buyer.

DDU (Delivered Duty Unpaid) –

Terms of sale are like the DDP we explained above, except for customs clearance and taxes in the destination country.

According to DDU, the seller\supplier must deliver the goods to the destination point, after clearing it from the import customs. However, he is not required to pay customs duties. It is the buyer’s responsibility.

* Price in an international trade transaction will always include the price, the relevant terms of sale, named place, and the INCOTERMS according to which the transaction was made.

Want to learn more about how to choose the right terms of sale for you? Get ideas for smart packaging to reduce costs? Read our article on “5 Effective Ways to Reduce Manufacturing Costs”.