Shipping Acronyms and what they mean for importers

When you’re buying from overseas, especially from China, you might get a quote for your product followed by an innocent looking acronym such as FOB. Do you know what this actually means as it could be the precursor to a large bill if you don’t know what to expect.

Here are some of the most common shipping acronyms with a brief outline of the responsibilities which remain with the seller and those that fall to the buyer.

Acronym Meaning What it means to you
EXW Ex Works The seller makes the goods available at their premises, or at another named place. It’s up to you to pick them up, transport them to a dock and get them shipped
FCA Free Carrier The seller delivers the goods, cleared for export, at a named place. It’s still down to you to pay the carrier and get them shipped
CPT Carriage Paid To The seller pays for the goods to be delivered to a named place, but once the carrier has picked them up in the country of export they become your responsibility. You still have to deal with the Import paperwork and duties.
CIP Carriage and Insurance Paid to Similar to CPT, but the seller pays for insurance whilst the goods are in transit.
DAT Delivered At Terminal The seller pays for the goods to be delivered and unloaded off the ship or plane at a named terminal. You are still liable to pay any tax and duties due and handle the import paperwork.
DAP Delivered At Place The seller delivers to a nominated place handling all export costs and paperwork. The buyer will still need to handle import paperwork and costs, but then the goods will be shipped from the arrival terminal to the nominated destination.
DDP Delivered Duty Paid This is the simplest solution for the buyer, but the most expensive for the seller. The goods are delivered after clearing import customs at the seller’s expense and delivered to the nominated place at which point they’re handed over to the buyer.
FAS Free Alongside Ship The seller delivers when the goods are placed alongside the buyer’s vessel at the named port of shipment. The buyer has to pay the cost of loading onto the ship and all onward charges

FOB Free on Board Similar to FAS, but the seller bears the additional cost of loading the goods onto the vessel.

CFR Cost and Freight The sellers pays the cost to transport the goods to the named destination port. Ownership passes to the buyer once the goods are loaded onto the vessel in the export country.

CIF Cost, Insurance & Freight Pretty much the same as CFR, but the seller will also purchase insurance while the goods are in transit to the destination port.