Despite political and economic relations, international trade is a fundamental component of the economies of many countries. Thus, it has always been, is, and will be. The only difference is the volume of transported goods.
In order to ensure optimal loading of transport networks, freight shipment terms distinguish several types of cargo delivery. Let’s take a closer look at the shipment terminology and highlight the most popular methods of transporting products.
What is freight experience?
To begin with, let’s clarify what freight experience means. When buying any goods online and ordering them from abroad, customers deal with a long chain of steps that every parcel goes through before getting to the end consumer. These include:
- Collecting documentation about a product.
- Choice of transportation means.
- Cargo clearance.
- Customs clearance.
- Assigning a tracking number to the parcel.
Shipment is a difficult task since each delivery method has its own nuances. That is why customers need to entrust the process of cargo delivery to a reputable freight agency. They will ensure the safe and correct transportation of goods in accordance with accepted international standards and shipping terms.
5 Most Popular Vehicles for Transporting Parcels
According to the type of vehicle, there are several ways to deliver cargo:
- By road autos;
- Through railway stations;
- Via water vessels;
- By airplanes;
- Using several means.
The following factors may influence the choice of freight shipping terms:
- nature of the cargo (dangerous/perishable/oversized/alive/long);
- the number of shipment items;
- parcel dimensions;
- the place of departure and place of destination;
- the cost of the transportation itself.
TOP-10 Popular Freight Terms
Let’s list the most popular ways of international cargo delivery. Below, you’ll find 10 common terms for cooptation between sellers and buyers located in different states.
1. EXW freight terms
This method of parcel shipment is perfectly described by the “pickup” term. Its essence is that a seller is not responsible for product delivery. The only obligation of a company is to produce, mark, and pack goods. The rest lies on the buyer’s shoulders. Thus, it is the customer who is responsible for customs formalities, loading and unloading works, transportation, and insurance.
2. FCA delivery
The freight term means that the seller’s obligations towards parcels remain only until products are handed over to the carrier chosen by the buyer. Freedom in choosing a logistics company by the consumer is not limited. Franco is a place where the responsibility for the safety and transportation of goods is completely shifted to the consumer’s shoulders.
Using this freight terms meaning, the seller is responsible for cargo shipment and unloading at the terminal. The exact location is specified in the terms of the contract. Payments of export duties and other costs related to cargo exportation are on the exporter’s side. Import formalities are the responsibility of the buyer.
This is one of the most common shipping terms. The basic concept of the method implies that the seller is obliged to deliver the exported cargo to the place specified in the contract. The deal is met when parcels are handed over to the carrier. The exporter is obliged to pay the costs of loading the goods; transportation to the destination is also his task.
After that, the responsibility for the safety of products is shifted to the buyer’s shoulders. Delivery to the warehouse of a store or to another endpoint is also carried out at his expense.
Under the terms of DAP delivery, both sides agreed upon the place of delivery. The customer rides his own vehicle to the destination, where packages are reloaded to the trunk. The seller bears the cost of shipping the product to its destination. Customs clearance and payment of duties are the responsibility of the buyer.
You may notice that DAT and DAP have similar meanings. According to shipping terms definitions, the only difference is that delivery is carried out to a certain “place” for the first one and to the “terminal” for the latter case.
This kind of outbound freight term means that parcels are delivered by an importer at the agreed place. DDP puts the importer in an advantageous position. The burden of customs clearance and shipment worries is not applicable here.
The main concept of this shipment method is implemented regardless of the type of vehicle used for transportation. It can also be multimodal transportation. The terms of delivery are the most favorable for the buyer. According to inbound shipment meaning, the customer is responsible for unloading goods only.
All the above-mentioned inbound transportation definitions are related to any vehicle. Yet, this method and the below-listed ones are applicable to vessels only.
The term FOB is used only for transportation by sea or river water vehicle. The obligations of the seller are fulfilled after goods have crossed the ship’s rail and are on board. From this moment on, the receiver is eligible for the cost of secure placement of cargo on board, packages unloading upon arrival at the port of destination, and further transportation to a store or warehouse.
FAS is one of four freight terms definitions that are used only for sea shipping. This type of freight term means that it is the seller’s obligation to deliver products to the berth specified by the customer and place them near the ship. After the conditions are met, the responsibility for the goods passes to the buyer. Transshipment and delivery of cargo to the port of loading are fully paid by the seller.
The term CIF consists of 3 words: “cost”, “freight”, and “insurance”. This transcript clearly indicates the responsibility of the supplier in terms of paying expenses, which include:
- Payment for delivery to the port chosen by the buyer;
- Cargo insurance, ensuring its unloading;
- Organization of export duty clearance.
The shipping lingo CIF term requires the transport of goods exclusively by sea. As a rule, it is undesirable to use CIF for container transportation. It is worth noting that under CIF provisions, the sender insures parcels at the minimum rate.
This type of transportation implies that payment of the cost of goods and their freight delivery by water transport to the port of the customer is on the seller’s shoulders. According to inbound freight meaning, the importer undertakes further organizational issues. These include customs clearance, unloading goods, and delivery to a warehouse, store or end customer.
Although nowadays, we observe some tension in international trade, cargo shipment between states and continents will always stay relevant. Thus, this business never ceases to exist. That is why it is important to know what freight terms are and their meanings.
So, here, we observe the most popular ways of transporting goods in the framework of international trade. However, each type has many subtleties. So, it is easier to find a trusted agency that will help you arrange safe delivery or consult on the correctness of the chosen shipping method. Depending on the case and the type of parcels, the most suitable shipment solutions are picked.