Freight Glossary | Incoterms and Logistics Terms

Delivery terms and logistics vocabulary decide who bears which cost and which risk in a shipment. The terms below are the ones you will meet most often in contracts and invoicing.

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C

CFR — Cost and Freight: The seller pays the freight to the named port of destination and clears the goods for export. Risk, however, passes to the buyer once the goods are on board at the port of shipment, so cost and risk pass at different points. The seller has no obligation to insure.
CIF — Cost, Insurance and Freight: In addition to the CFR obligations, the seller arranges and pays for marine insurance covering the voyage. Risk still passes to the buyer when the goods are loaded on board at the port of shipment. Used only for sea and inland waterway transport.
CIP — Carriage and Insurance Paid To: In addition to the CPT obligations, the seller arranges and pays for cargo insurance. Risk still passes to the buyer when the goods are handed to the first carrier. It can be used for any mode of transport.
CMR: The convention governing international carriage of goods by road (Convention relative au contrat de transport international de Marchandises par Route), and the consignment note based on it. CMR insurance covers the carrier's liability for the cargo within the terms of the convention.
CPT — Carriage Paid To: The seller pays the carriage to the agreed destination and clears the goods for export. Risk passes to the buyer when the goods are handed to the first carrier. It can be used for any mode of transport.

D

DAF — Delivered At Frontier (withdrawn): The seller placed the goods, cleared for export but not for import, at the buyer's disposal at the named frontier point. Withdrawn in Incoterms 2010 and replaced by DAP. It may still appear in older contracts.
DAP — Delivered At Place: The seller places the goods at the buyer's disposal at the named destination, ready for unloading on the arriving means of transport. Import clearance and duties are the buyer's responsibility. Introduced in Incoterms 2010, replacing DAF, DES and DDU.
DDP — Delivered Duty Paid: The seller bears all costs, duties and risks, including import clearance, and places the goods at the buyer's disposal at the named destination. It is the term with the greatest obligation for the seller.
DDU — Delivered Duty Unpaid (withdrawn): The seller placed the goods at the buyer's disposal at the named destination without paying import duties. Withdrawn in Incoterms 2010 and replaced by DAP.
DEQ — Delivered Ex Quay (withdrawn): The seller placed the goods at the buyer's disposal on the quay at the port of destination. Withdrawn in Incoterms 2010, replaced first by DAT and then, in Incoterms 2020, by DPU.
DES — Delivered Ex Ship (withdrawn): The seller placed the goods at the buyer's disposal on board the vessel at the port of destination, not cleared for import. Withdrawn in Incoterms 2010 and replaced by DAP.
DPU — Delivered at Place Unloaded: The seller delivers the goods unloaded from the arriving means of transport at the named destination. It is the only Incoterm under which the seller must unload. Import clearance and duties remain with the buyer. It replaced DAT in Incoterms 2020.

E

Export Letter of Credit: A document opened through the importer's bank guaranteeing payment to the exporter on presentation of the specified documents. It reduces payment risk where the parties do not know each other.
EXW — Ex Works: The seller places the goods at the buyer's disposal at their own premises (factory, warehouse, etc.). Loading, carriage, export clearance and all costs and risks fall to the buyer. It is the term with the least obligation for the seller.

F

FAS — Free Alongside Ship: Delivery takes place when the seller places the goods alongside the vessel on the quay or in a barge at the named port of shipment. Costs and risks pass to the buyer from that point. Used only for sea and inland waterway transport.
FCA — Free Carrier: The seller's obligation ends when the goods, cleared for export, are handed to the carrier nominated by the buyer at the named place. Risk passes to the buyer at that point. It can be used for any mode of transport.
Feeder: In multi-leg shipments, the intermediate vessel that carries cargo from smaller ports to the main transhipment hub, or distributes it from there.
FIFO — First In, First Out: A stock management method in which the items that entered the warehouse first are the first to be shipped out. It is used to limit dwell time for goods with a shelf life.
FOB — Free On Board: The seller fulfils their obligation when the goods, cleared for export, are loaded on board the vessel at the named port of shipment. Risk passes to the buyer once the goods are on board. Used only for sea and inland waterway transport.
Force Majeure: Extraordinary events named in a contract that the parties could not foresee and that make performance of their obligations impossible. Natural disasters, war and strikes are typical examples.
Foreign Trade Zones: Designated areas where dutiable goods may be brought in, stored, transhipped, repacked or processed without payment of duty. The liability arises only when the goods enter the domestic market.
Forwarding Agency: A company specialising in shipping goods abroad. Alongside transport it handles insurance, customs clearance and documentation on the shipper's behalf.
Freight Forwarder: An intermediary that accepts less-than-truckload consignments, consolidates them and arranges their carriage. By combining small shipments it obtains more economical transport on the shipper's behalf.

I

Incoterms: A set of rules published by the International Chamber of Commerce (ICC) defining delivery terms in international sales. They establish where costs, risks and customs obligations pass between seller and buyer. The current edition is Incoterms 2020.

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