Delivery Terms in International Trade

International trade is an extensive process, involving numerous procedures and details. In this domain, multiple contracts and agreements are established between parties, ensuring the security of both parties, any intermediaries, and the goods involved.

One of the critical aspects that need to be determined in international trade is the delivery term. When defining the delivery terms, factors such as the delivery location, who bears the costs, how expenses are split, insurance, and transport agreements must be clarified. In short, all responsibilities of the buyer and seller should be jointly decided upon and finalized. Many people seek answers to the question, 'What are the delivery terms in international trade?'

Fundamentally, delivery terms in international trade are categorized into 11 groups. These include terms covering all transport types and those specific to sea and inland waterway transport. The terms include:

• EXW (Ex Works): Delivery at the seller’s premises
• FCA (Free Carrier): Delivery to the carrier, with costs covered up to that point
• FAS (Free Alongside Ship): Delivery alongside the ship, costs up to the dock
• FOB (Free on Board): Delivery on board the ship
• CFR (Cost and Freight): Costs and freight covered
• CIF (Cost, Insurance, and Freight): Costs, insurance, and freight covered
• CPT (Carriage Paid To): Carriage paid to the destination
• CIP (Carriage and Insurance Paid To): Carriage and insurance paid to the destination
• DAT (Delivered at Terminal): Delivery at the terminal
• DAP (Delivered at Place): Delivery at a specified location
• DDP (Delivered Duty Paid): Delivery with duties paid

Each of these terms involves details decided according to the type and conditions of the trade. The parties begin the process by choosing the most suitable delivery terms for their specific transaction.

Export Delivery Terms
Export delivery terms outline the seller’s role in delivery within international terms. The most common of these is EXW (Ex Works), where the seller delivers goods at their own facility or another designated place, such as a warehouse. Here, goods are handed over to the buyer before customs clearance and loading onto vehicles, transferring all risks and responsibilities to the buyer, who also bears the insurance costs.

In FOB (Free on Board), the seller delivers the goods at the loading port designated by the buyer, specifically on board a vessel chosen by the buyer. Customs clearance and duties at this stage are the seller’s responsibility. The seller holds all responsibilities until the goods are loaded onto the ship, after which the buyer assumes all risks.

Import Delivery Terms
The most common delivery term in imports is FCA (Free Carrier), where the seller completes customs clearance and delivers the goods to a carrier chosen by the buyer at a specified location. The seller bears all costs and responsibilities until the goods are handed over to the carrier, after which the buyer takes on all risks and responsibilities.

Another import delivery term is FAS (Free Alongside Ship). Here, the seller is responsible for placing the goods alongside the vessel at the loading port, and customs clearance is completed by the seller. All risks and responsibilities transfer to the buyer once the goods are alongside the ship.

Customs Delivery Terms
Among customs delivery terms is DDP (Delivered Duty Paid), where the seller’s responsibility ends with the payment of customs duties. In this case, the seller delivers the goods to the specified location in the buyer's country, covering all customs duties. Although there’s no obligation for the seller to arrange insurance, doing so is advisable, as the seller is responsible for the goods until they clear customs.

In DDU (Delivered Duty Unpaid), the seller delivers the goods at the specified location in the buyer's country, but without paying the customs duties. The seller prepares the goods and handles customs formalities, but the actual payment is made by the buyer, who also covers any additional risks and costs due to delays.

Foreign Trade Delivery Terms
Delivery terms in foreign trade define the shifting responsibilities between buyer and seller. For instance, EXW imposes minimal responsibility on the seller, while FCA involves slightly more seller responsibility. DDP places significant responsibility on the seller, whereas DAT increases the buyer’s responsibilities.

There are also many inquiries about foreign trade payment and delivery terms. Common payment methods include advance payment, open account, documentary collection, credit-based acceptance, letter of credit, and bank payment obligation. Delivery and payment terms in foreign trade are fully determined through mutual agreement between the buyer and seller. No trade process can begin without an agreement between the parties.

Once the parties agree on the delivery and payment terms, the necessary documentation, contracts, and timely payments are prepared in line with the agreed terms. Following this, the delivery process begins with the seller, and both parties manage the transaction according to their respective responsibilities. Once the buyer confirms receipt of the goods, the commercial transaction is complete.