INCOTERMS®

Incoterms® (international commercial terms) are an established and internationally accepted set of rules in contracts for the shipping and sale of goods around the world. They were established by the International Chamber of Commerce in 1936, to designate which party is responsible for paying a specific segment of the global transportation of goods process and who is responsible during each segment.

Incoterms Defined
EXW - EX Works (named place of delivery)

The seller is required to make goods ready for pickup at his or her own place of business, or on a specified one. If both parties decide that the seller will load them this has to be specified clearly in the contract as it’s not included in the EXW term of sale.

Also the clearance of Customs and the export documentation are also part of the buyer’s duties.

FCA - Free Carrier (named place of delivery)

Designates the location the seller is to deliver the goods. The cost of transportation is included in the price set by the seller, and the risk of loss is initially on the seller, transferring to the buyer upon delivery to the carrier.

FAS - Free Alongside Ship (named port of shipment)

Here the seller is required to deliver the goods to the dock alongside the buyer’s ship at the agreed port of shipment and have the goods cleared for export. The buyer then assumes the costs and risks involved with the goods transportation.

FOB - Free On Board (named port of shipment)

The seller is responsible for all the costs and risks until the goods are delivered on board the ship including export clearance. The buyer is responsible for paying the ocean freight costs, bill of lading fees, insurance, unloading and transportation charges from there to final destination.

It’s important to note that FOB should only be used for non-containerized ocean freight and inland waterway transportation of goods. For other shipping modes FCA should be used instead.

CFR - Cost and Freight (named port of destination)

The seller is responsible for paying the transportation of the goods up to the destination port and export clearance. The risk transfers from seller to buyer as soon as the goods have been loaded on board the ship at the export country. The delivery from the destination port to the buyer’s premises lays upon the buyer as well as the insurance costs.

CIF - Cost, Insurance & Freight (named port of destination)

This mode is very similar to the previous CFR but the seller must also insure the goods while traveling to its agreed destination.

CPT - Carriage Paid To (named place of destination)

Here the seller has to pay the export clearance and shipping costs to agreed place of destination. Goods are delivered when received by the first carrier, risk then transfers to the buyer party.  If buyer prefers the seller to insure the goods, CIP mode might be the best solution.

CIP - Carriage and Insurance Paid to (named place of destination)

This mode is very similar to the previous CPT with the added benefit to the buyer that the seller has to insure the goods while travelling to its agreed destination.

The CIP mode is a valid option for every kind of shipping while the CIF mode (at the end of this list) is to be used only for non-containerized ocean freight and inland waterway transport of goods.

DAT - Delivered At Terminal (named terminal at port or place of destination)

Under this mode of shipping the seller has to deliver the goods and unload at the agreed upon terminal. The seller party assumes all the transportation costs (export charges, transport, unloading from main carrier at the destination harbor and, if present, destination port charges) as well as all the risk until the goods arrive at the agreed port or terminal.

The buyer is responsible for all the costs incurred after unloading (as could be import duties, taxes, customs, etc).

DAP - Delivered At Place (named place of destination)

The obligations of the seller are considered finished when the goods are ready to be unloaded in the chosen transportation method at the agreed place of destination. At this precise moment the risk transfers from the seller to the buyer. The seller is responsible for the packing of the goods at origin, as well as the export clearance. The seller assumes all the transportation costs up to the agreed place of destination, where the buyer has to cope with the unloading cost.

When the goods arrive in the destination country, the buyer is responsible for the customs clearance process as well as the payment of the necessary duties and taxes.

DDP - Delivery Duty Paid (named place of destination)

This is the maximum obligation that can be assumed by a seller. It’s at the opposite side of the spectrum from the FCA mode. The selling party has to deliver the goods at the agreed place of destination, and has to pay all the transportation costs, duties and taxes. The only part which is not its responsibility is the final unloading of the goods.

As the seller has to obtain all the necessary import authorizations, and pay all the customs and taxes needed in the destination country, this mode can be very risky for the seller if the destination country’s legal regulations are not very well known.

incoterms
Acronyms of International Shipping
LCL - Less than Container Load

Describes a shipment that does not fill the shipping container capacity. Cost savings can be achieved through consolidation with your 3PL, filling the remaining capacity

LTL - Less than Truckload

Describes a ground shipment that does not fill the shipping container or trailer’s capacity. Cost savings can be achieved through consolidation with your 3PL, filling the remaining capacity.

CFS - Container Freight Station

A port facility for loading and unloading containerized cargo to and from ships or planes.

CY - Container Yard

Where containers are staged before they are loaded onto vessels.

FCL - Full Container Load

Describes a shipment that fills the shipping container capacity.

AWB - Air Way Bill

A receipt issued by an international airline for transportation of goods.

HBL - House Bill of Lading

Transportation contract which takes place between a customer and a forwarder for goods to be shipped or transported in a group.

MBL - Master Bill of Lading

Transportation contract which takes place between a customer and a forwarder for goods to be shipped or transported in a group. However, unlike the HBL, the master bill of lading is issued by the shipping company or carriers. The document summarizes the different quantities of cargo that is to be hauled for transport by the vessels or other modes of transport.

SLI - Shippers Letter of Instructions

Issued by the exporter to the forwarding agent and includes shipping instructions for air or ocean shipment.

ETD - Estimated Time of Departure

Issued by the exporter to the forwarding agent and includes shipping instructions for air or ocean shipment.

ATD - Actual Time of Departure

Exact time the shipment left its origin.

ETA - Estimated Time of Arrival

Approximate time a shipment will reach its destination.

ATA - Actual Time of Arrival

Exact time the shipment arrives at destination.

NVOCC - Non-Vessel Operating Common Carrier

A.K.A a freight forwarder or consolidator who does not own any vessel but functions as a carrier issuing its own bills of lading or air way bills and assume responsibility for the shipment.

“Source: ICC website. The full text of the 2010 edition of the Incoterms rules is available at http://store.iccwbo.org/.

“Incoterms” is a trademark of the International Chamber of Commerce (ICC). “

Global Guidance. Trusted Partnership.



Paul Conolly

Paul leads the Executive Team for the Oceanstar Group. Prior to founding the company, Paul enjoyed a distinguished career with OOCL–both at sea and ashore. At sea, Paul rose through the ranks to become OOCL’s youngest captain at the age of 27. After coming ashore, he held key management positions in both Asia and North America. Paul’s greatest strengths are his industry experience, critical thinking, and his leadership that extends to developing people and building robust teams and partnerships. Paul is a lifelong learner who is actively involved in supporting education. He has served on a number of non-profit Boards in the past, including the Waldorf School of Orange County, and is currently on the Board Of Trustees for the Association Of Waldorf Schools Of North America. Paul is married with two children and is an avid soccer fan.

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James Conolly

James oversees financial planning, manages risk, and evaluates strategic growth opportunities for Oceanstar as well as liaising with existing and potential investors. Prior to joining the company, James worked in banking, most recently with Barclays Investment Bank. During his 18-year banking tenure, James worked across multiple industry sectors, including Transportation and Logistics where his consultative approach to financial risk management has safely steered many companies through turbulent market conditions. James relocated from the UK to Southern California in April 2016 with his wife and two children and has wasted no time in learning to surf.

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Cara Conolly

 

Cara guides the Oceanstar team in the realm of Human Resources, operations, and payroll. Co-founder of the company, she draws from her many years as an educator and her studies in psychology to help develop the potential of each member of the team. Cara’s greatest strengths are her strong business acumen, solution-based orientation, and real connection to people. Cara loves cooking, hiking, traveling, and spending time with family and friends. She is married with two children.

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Irene Lim

Irene Lim spearheads Oceanstar Group’s Sourcing division with responsibility for all aspects of the business including sourcing, trading, import/export, and logistics. Prior to joining Oceanstar, Irene was the Export Sales Manager for ARC Air Logistics. A veteran, with over 30 years of experience in commodity sales, sourcing, and freight forwarding, she brings extensive knowledge, a true sense of urgency, negotiating prowess, and well-established contacts that enable her to execute seemingly impossible deals. Because helping and serving others is her passion, Irene makes herself available to her customers with full dedication. Irene loves to cook, spend time with her three daughters, and unwind with her DVR.

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Logan Moore

Logan manages Oceanstar’s Global transportation division with responsibility for business development, agency alignment, staffing, and regulatory oversight. Most recently, he served as a Director of International Pricing at Suddath Global Logistics. Logan began his 30-year freight forwarding industry tenure as an import documentation runner and warehouse employee. Through his advancement, he has learned every aspect of the business while building steadfast relationships. Logan’s nuanced industry knowledge and exceptional negotiating skills benefit Oceanstar’s partners at every turn. Raised in Chicago with a particular love for the game of baseball, Logan was a long suffering Cubs fan but with the Cubs ending a 108 year drought his loyalty has finally paid off.

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Paul Conolly

Paul leads the Executive Team for the Oceanstar Group. Prior to founding the company, Paul enjoyed a distinguished career with OOCL–both at sea and ashore. At sea, Paul rose through the ranks to become OOCL’s youngest captain at the age of 27. After coming ashore, he held key management positions in both Asia and North America. Paul’s greatest strengths are his industry experience, critical thinking, and his leadership that extends to developing people and building robust teams and partnerships. Paul is a lifelong learner who is actively involved in supporting education. He has served on a number of non-profit Boards in the past, including the Waldorf School of Orange County, and is currently on the Board Of Trustees for the Association Of Waldorf Schools Of North America. Paul is married with two children and is an avid soccer fan.

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