Comprehensive Explanation of International Trade Terms Key Concepts and Their Functions in Practice

Understanding International Trade Terms A Knowledge Sharing on Key Concepts of International Trade

With the continuous acceleration of globalization, international trade has become an important component of each country's economy. However, for many practitioners in the field of international trade, international trade terms may be a relatively unfamiliar area. This article will provide a detailed explanation of some commonly used international trade terms, helping everyone better understand and apply these terms, thus becoming more proficient in international trade.

1. FOB Free On Board Delivery on Board

FOB refers to the seller delivering the goods to the carrier designated by the buyer at the specified port and bearing the risks and costs before the goods are delivered on board at the loading port. This term applies to sea or inland waterway transportation. It is worth noting that the FOB price does not include insurance costs, so the buyer needs to purchase insurance independently.

2. CIF Cost, Insurance and Freight Cost, Insurance and Freight

CIF means the seller is responsible for booking the cargo space, paying freight and insurance costs, handing over the goods to the designated carrier, and bearing the risks and costs after the goods are delivered on board at the loading port. This term applies to sea or inland waterway transportation, as well as transport to destination airports or railway stations. When using the CIF term, the seller needs to handle the transportation and insurance of the goods, and take responsibility for handling relevant procedures and paying related expenses.

3. EXW Ex Works Factory Delivery

EXW means the seller delivers the goods to the carrier designated by the buyer at the specified factory or other designated location and bears the risks and costs before the goods are handed over at the designated location. This term applies to any form of transportation, including land transport, sea transport, air transport, or multimodal transport. It should be noted that under the EXW term, the seller is responsible for handing over the goods to the carrier but does not need to bear the responsibility for handling relevant procedures or paying related expenses.

4. DDP Delivered Duty Paid Delivery Duties Paid

DDP means the seller delivers the goods to the person or organization designated by the buyer in the destination country and bears all taxes and risks within the territory of the destination country. This term applies to any form of transportation, including sea, air, rail transport, or multimodal transport. When using the DDP term, the seller must assume responsibility and risk for delivering the goods to the buyer, including all taxes and risks within the territory of the destination country.

5. Other Terms

In addition to the four common international trade terms mentioned above, there are many other trade terms, such as FCA Free Carrier, CPT Carriage Paid To, and CIP Carriage and Insurance Paid To. Each of these terms has its own characteristics and application scenarios, which need to be selected based on specific situations.

In conclusion, understanding and mastering international trade terms is very important for those engaged in international trade. Through this introduction, it is hoped that everyone can better understand and apply these terms, improve trade efficiency and accuracy, and reduce trade risks.