The simplest and most basic shipment arrangements ,the Seller’s/Shipper’s only responsibility is to make the goods available at the Seller’s/Shipper’s premises. The Buyer bears full cost and risks of moving the cargo from origin to destination.
FOB(Freight On Board)
One of the most commonly used and misused terms, wherein the Seller/Shipper delivers the goods for export. From that point, the Buyer bears all costs and risks of loss or damage.
The Seller/Shipper delivers the goods, cleared for export to the carrier selected by the Buyer. The Seller/Shipper loads the goods if the carrier pick-up is at the Seller’s/Shipper’s premises. The buyer bears the cost and risks of moving the goods to destination.
FAS(Free Alongside Ship)
The Seller/Shipper delivers the goods to the origin port. The Buyer bears all the transportation costs and the risk of loss or damage of goods.
CFR(Cost and Freight)
It is the Seller’s/Shipper’s responsibility to get goods from their door to the port of destination. “Delivery” is accomplished at this time. It is the Buyers responsibility to cover insurance from the port of origin or port of shipment to Buyer’s door. Given that the shipper is responsible for transportation, the shipper also chooses the forwarder.
CIF(Cost, Insurance and Freight)
The Seller clears the goods for export and pays the costs of moving the goods to the port of destination. The Buyer bears all risks of loss or damage. The Seller, however, purchases the cargo Insurance.
CPT(Carriage Paid To)
The Seller pays for moving the goods to destination. From the time the goods are transferred to the first carrier, the Buyer bears the loss or damage. The Seller buy cargo insurance naming the Buyer as the insured while the goods are in transit.
CIP(Carriage and Insurance Paid To)
This term is primarily used for multimodal transport, it relies on the carriers insurance, the Seller/Shipper is only required to purchase minimum coverage. This term requires the Seller to clear the goods for export. Freight Forwarders often act in effect as carriers. The Buyers insurance is effective when goods are turned over to the Forwarder.