Delivery Types

Delivery Forms Abbreviations

Delivery Types

Delivery methods are standardized in foreign trade and the same terms are used in all countries. Delivery types indicate where the seller's responsibility is (transportation, loading and unloading, customs procedures, insurance, damage, etc.) and where the buyer's responsibility begins. The method of delivery should be clearly stated in the contract when a contract is made regarding foreign trade. At this point, it should not be forgotten that the more responsibility the seller assumes, the more it reflects in the price. Delivery forms are expressed in English abbreviations. The forms of delivery used as standard internationally and the responsibilities they impose on the parties are explained below.

EXW (Exworks):  Delivery at the workplace: The seller (exporter) delivers the goods to the buyer (importer) at the workplace (factory, warehouse, etc.) specified in the contract and agreed with the buyer. The place of delivery is in the exporter's country and the delivery takes place without customs clearance related to export. In this form of delivery, the seller's responsibility is to deliver the agreed amount of goods to the buyer at the place and time specified in the contract. After delivery, all responsibilities pass to the buyer. Therefore, the buyer is responsible for export-related customs clearance, transportation and insurance of the goods from the delivery place to the destination, and all costs related to these belong to the buyer. This form of delivery is the one that imposes the least responsibility on the seller and the most on the buyer.

FCA (Free Carrier):  Delivery to the Carrier: The seller delivers the goods with export customs clearance to the carrier specified by the buyer at the place specified by the buyer. The place of delivery is again in the country of the exporter. However, in this form of delivery, the seller is responsible for carrying out export customs clearance and delivering the goods intact to the carrier. All subsequent responsibilities belong to the buyer. The buyer pays the cost of transportation and insurance up to the destination of the goods. If the goods are delivered to the vehicle at a place belonging to the seller (workplace, factory, warehouse, etc.), the responsibility of loading the goods belongs to the seller, otherwise the seller is not responsible for loading.

FAS (Free Alongside Ship):  Delivery next to the ship: The seller prepares the goods with the export customs clearance completed, at the port determined by the buyer, next to the ship specified by the buyer. The seller's responsibilities end when the goods are ready next to the ship. From this point on, all responsibilities belong to the buyer. The buyer is responsible for loading the goods on the ship, unloading them at the destination port, import customs clearance, transporting them from there to the destination and all insurance procedures after receiving the goods. This term is used only in maritime transport.

FOB (Free on Board):  Delivery on board: The difference from FAS is that the delivery takes place not next to the ship, but when the goods pass over the ship's rail. This shows that the loading operations at the departure port (until the goods pass the ship's rail) belong to the seller. After that, the buyer's obligations begin and they are the same as in the FAS delivery form. This term is also used only in maritime transport.

CFR (Cost and Freight): Delivery with freight (carriage cost) paid: In this form of delivery, the seller pays the freight (carriage cost). Therefore, the seller makes the contract of carriage to bring the goods to the destination port specified by the buyer, and the seller pays the transportation cost. However, the responsibility of the seller for the loss and damage of the goods is until the goods pass the ship's rail, as in the form of FOB delivery. From this point on, all responsibility for loss and damage passes to the buyer. For this reason, it is the buyer's responsibility to insure the goods against loss and damage from the ship's rail and to pay the insurance cost. The buyer is also responsible for the unloading of the goods at the port of destination, import customs clearance and transportation to the destination and all related insurance procedures. This form of delivery is also used only in sea transportation.

CIF (Cost, Insurance and Freight):  Delivery with freight and insurance costs paid: The difference of this delivery method from CFR is that the seller is responsible for having the marine insurance and paying the cost until the goods arrive at the destination port. From the destination port, the responsibilities of the buyer are the same as in the CFR delivery form. However, it is useful to make the following point. Although the marine insurance is taken out by the seller, the delivery of the goods takes place when the goods pass the ship's rail. The seller takes out the insurance on behalf of the buyer. In other words, if the risk materializes, the buyer has to carry out the transactions related to receiving compensation from the insurance. Because as soon as the goods pass the ship's rail, the legal owner of the goods becomes the buyer. This form of delivery is also used only in sea transportation.

CPT (Carriage Paid To):  Freight paid delivery to the specified destination: Here, the seller delivers the goods to a carrier of his choice and bears the transportation costs to the destination specified by the buyer. Import customs clearance belongs to the buyer. The seller's liability for loss and damage ends when the goods are delivered to the carrier. From this point on, the responsibility for loss and damage, taking out the transportation insurance and paying the insurance cost belongs to the buyer. This form of delivery is the form of CFR used in other modes of transport, except by sea. The term CPT is also used in mixed transport (for example, by sea up to a certain point, then by rail and road).

CIP (Carriage and Insurance Paid To):  Delivery with freight and insurance costs paid: It is the type of CIF delivery method used in non-maritime transports and mixed transports. The difference from CPT is that the seller takes out the transportation insurance and the seller pays the insurance cost.

DAF (Delivered at Frontier):  Delivery at the specified border: It is mostly used in rail and road transport. The seller chooses the means of transport, clears the customs for export, loads the goods, pays the freight to the named place and delivers them to the buyer, unloaded from the means of transport, before the customs border of the adjacent country. From this point on, transportation and all other responsibilities and costs belong to the buyer.

DES (Delivered Ex Ship):  Delivered on board at the specified port of destination: Here the goods are delivered to the buyer on board the ship at the specified port of destination. In FOB, CFR and CIF delivery forms, the payment of insurance cost or payment (change of legal ownership of the goods) was passed to the buyer when the goods passed the rail at the first port of shipment. In the DES delivery form, the transfer of the goods to the buyer takes place at the port of destination and on board the ship. Therefore, all responsibilities and costs belong to the seller here, until the port of destination. However, since the delivery takes place on the ship, all subsequent transactions, responsibilities and costs, including unloading, belong to the buyer. This term is used only in maritime transport.

DEQ (Delivered Ex Quay):  Delivery at the quay at the designated destination port: The difference from the DES delivery method is that the unloading operations at the destination port are also performed by the seller. Here, the delivery takes place at the quay after the goods are unloaded from the ship. This term is also used only in maritime transport.

DDU (Delivered Duty Unpaid):  Delivery at the specified destination without paying customs duty: It means that the goods are delivered to the buyer at the specified destination without being unloaded from the transport vehicle at the specified destination, with the customs clearance procedures not completed for import. All responsibilities and costs belong to the seller until the delivery takes place. After delivery, all responsibility and costs pass to the buyer. It can be used for all modes of transport.

DDP (Delivered Duty Paid):  Delivery with customs duty paid at the specified destination: The difference of this delivery method from DDU delivery method is the delivery of the goods to the buyer with the import customs procedures completed. This form of delivery is the one that imposes the least responsibility on the buyer and the most on the seller.

The choice of delivery modes requires a cost-benefit analysis. As the seller's responsibilities increase (the buyer's responsibilities decrease), so does the price the seller will charge. On the other hand, as the responsibilities for the seller decrease (the buyer's responsibilities increase), the price charged by the seller decreases. Therefore, the buyer may take more responsibility if he can perform some of the actions (for example, transportation) to be performed by the seller at less cost. For example, let's say you both export and import to Germany. Trucks taking the goods to Germany can receive the imported goods on the way back. Therefore, it would be wiser to determine the delivery method by taking this matter into consideration. For example, you are importing from the Netherlands. You also export to Bulgaria. You can receive the goods at the Bulgarian border (non-contiguous border with Turkey). When making these decisions, you need to consider the benefits and costs of each form of delivery.

Some legal situations should also be taken into account while determining the delivery methods. For example, if the buyer cannot directly or indirectly fulfill the export-related customs clearance in the exporting country, he should not choose the EXW delivery method. Similarly, DDP delivery method should not be used if the exporter cannot fulfill the import-related customs clearance procedures directly or indirectly in the importer's country.