As globalization continues to sweep the world, international trade has become increasingly important. One of the critical areas of trade is transportation. Sea transportation is an essential aspect of international trade because it is cost-effective, reliable, and accommodates large cargo. In the process of sea transport, specific trade terms are used to enable smooth transactions between exporters and importers. In this article, I will discuss some of the English terms related to sea transportation in international trade.
1: FOB (Free On Board) This term is often used to denote the point at which the exporter has delivered goods on the vessel. The seller is responsible for all the costs, risks, and charges incurred before the shipment is loaded onto the ship. Once the shipment is on board, the buyer becomes responsible for the costs and risks of the goods in transit.
2: CIF (Cost, Insurance, and Freight) CIF is a trade term indicating that the seller must pay for the cost, insurance, and freight expenses incurred while the goods are in transit. These expenses are included in the price charged by the seller.
3: DDP (Delivered Duty Paid) DDP is a trade term that puts the responsibility for all the costs, including duties, taxes, and clearance at the destination to the seller. This means the seller bears all the risks and costs associated with transporting the goods until they reach their final destination.
4: EXW (Ex Works) This trade term is used when the seller makes the goods available at their premises, and the buyer is responsible for arranging transportation to the destination. The seller’s responsibility is only to ensure that the goods are packed and made available for collection at their premises.
5: CFR (Cost and Freight) CFR is similar to CIF, but it does not include insurance costs. This means that the seller is responsible for the costs and freight charges to deliver the goods to the port of destination, and the buyer bears the risk of damage or loss while the goods are in transit.
Conclusion International trade can be a complicated process, especially with the involvement of different transportation modes. Using standardized trade terms is essential to simplify the process and ensure clarity between the seller and the buyer. The trade terms listed above are some of the essential trade terms used for sea transportation in international trade. It is crucial to understand these terms when shipping goods overseas to avoid any misunderstandings and ensure a smooth transaction.