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Your Essential Guide to Shipping Terms explained
The Foundation: Incoterms 2025 Explained
Incoterms (International Commercial Terms) are a set of 11 pre-defined rules published by the International Chamber of Commerce (ICC). They clearly define the responsibilities of buyers and sellers for the delivery of goods, establishing who pays for what and where the risk transfers.
The terms are grouped into two categories:
1. Terms for Any Mode of Transport (The Universal 7)
These terms are flexible and can be used for air, road, rail, or sea freight.
| Term | Full Name | Seller Responsibility | Transfer of Risk | Buyer Responsibility |
| EXW | Ex Works | Minimum. Goods are made available at the seller’s premises. | At the seller’s premises. | Maximum. Buyer assumes all costs and risks from pickup. |
| FCA | Free Carrier | Goods delivered to the buyer’s nominated carrier at a named place. | When goods are delivered to the carrier. | Buyer arranges and pays for main carriage. |
| CPT | Carriage Paid To | Seller pays for main carriage to the named destination. | When goods are delivered to the first carrier. | Buyer pays for insurance and all costs after the risk transfer. |
| DAP | Delivered at Place | Seller pays for transport and bears risk until goods are ready for unloading at the destination. | At the named destination point (before unloading). | Buyer handles import clearance and pays duties/taxes. |
| DDP | Delivered Duty Paid | Maximum. Seller pays all costs, including import duties and taxes, until goods arrive at the final destination. | At the final destination. | Minimum. Buyer only has to unload the goods. (Our most requested term!) |
2. Terms for Sea and Inland Waterway Transport
These terms are specifically used when the main carriage is by sea or inland waterway.
| Term | Full Name | Transfer of Risk | Key Difference |
| FOB | Free On Board | When the goods are loaded on board the vessel at the named port. | A classic term. Seller’s responsibility ends as soon as the goods are on the ship. |
| CIF | Cost, Insurance, and Freight | When the goods are loaded on board the vessel at the port of shipment. | Seller must also secure and pay for minimum insurance coverage until the goods reach the port of destination. |
Essential Logistics & Freight Terms
Essential Logistics & Freight TermsBeyond Incoterms, here are other critical abbreviations you’ll encounter in the logistics world:
BOL (Bill of Lading): The single most important legal document. It serves as a contract between the shipper and the carrier, a receipt for the goods, and a document of title. Never ship without one!
LTL (Less-Than-Truckload): A shipping method for goods that do not fill an entire truck trailer. Multiple shipments are consolidated to share space and cost.
FTL (Full-Truckload): A shipment that is large enough to fill an entire trailer or requires the exclusive use of a truck. This is typically faster than LTL.
3PL (Third-Party Logistics): A business (like Globax Solutions!) that provides outsourced logistics services for a business, covering warehousing, transportation, and inventory management.
Customs Broker: A licensed professional who specializes in moving goods through customs and ensuring compliance with import/export laws. They are crucial for preventing delays.
Tariff: A tax or duty to be paid on a particular class of imports or exports. Often calculated Ad Valorem (according to value).
Demurrage: A penalty charged by the shipping line for cargo that has not been picked up from the port terminal before the agreed-upon free time runs out.
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