The 11 Rules:
Carriage and Insurance Paid To (CIP)
Delivered at Place Unloaded (DPU) / (DAT)
Free On Board (FOB)
Free On Board (FOB)
“Free On Board” means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.
Use of this rule is restricted to goods transported by sea or inland waterway.
In practice it should be used for situations where the seller has direct access to the vessel for loading, e.g. bulk cargos or non-containerised goods.
For containerised goods, consider “Free Carrier FCA” instead.
Seller delivers goods, cleared for export, loaded on board the vessel at the named port.
Once the goods have been loaded on board, risk transfers to the buyer, who bears all costs thereafter.
For more details regarding the updated 2020 terms, please speak with your nominated shipping company or refer to the International Chamber of Commerce.
There are two key changes in Incoterms ® 2020 compared to the last edition:
- DAT (Delivered at Terminal) is renamed Delivered at Place Unloaded (DPU)
- FCA (Free Carrier) now allows for Bills of Lading to be issued after loading
Other changes include:
- CIF (Cost, Insurance and Freight) and CIP (Carriage and Insurance Paid To) set out new standard insurance arrangements, but the level of insurance continues to be negotiable between buyer and seller.
- Where listed, cost allocation between buyer and seller is stated more precisely – one article lists all costs the seller and the buyer are responsible for.
- FCA (Free Carrier), DAP (Delivered at Place), DPU (Delivered at Place Unloaded) and DDP (Delivered Duty Paid) now take account of buyer and seller arranging their own transport rather than using a third party.
- Security-related obligations are now more prominent.
- “Explanatory Notes for Users” for each Incoterm® have replaced the 2010 edition’s Guidance Notes, and are designed to be easier for users.
- CIP now requires as default insurance coverage ICC A or equivalent. It was ICC C under Incoterms® Required insurance coverage under CIF remains.