Air Freight Trade Terms Detailed Advantages and Disadvantages Explanation

In recent years, with the rapid development of international trade, air transport has become an increasingly important method of trade. However, issues such as trade terms, risks, and costs involved in air transport often trouble enterprises. This article will interpret the trade terms applicable to air transport in detail based on recent news, and discuss their advantages and disadvantages, hoping to help enterprises better understand and apply these trade terms, reduce trade risks, and improve trade efficiency.

1. FCA Free Carrier Delivery at Carrier's Location

The FCA trade term refers to the delivery of goods to the carrier at a specified location, usually a container yard or port handling area, where the risk transfers from the seller to the buyer upon delivery. This trade term is applicable to air transport and has the following advantages

1. Simplified Process Under the FCA term, the goods are directly handed over to the carrier at the delivery location, eliminating the need for multiple arrangements for customs clearance and transportation between the exporter's location and the destination, simplifying the air freight process.

2. Reduced Costs Since the risk transfers at the time of delivery, the seller does not need to purchase cargo insurance, reducing financial pressure and associated costs.

However, the FCA trade term also has some disadvantages

1. Limited Seller Liability Under the FCA term, the seller is only responsible for delivering the goods to the carrier and does not assume liability for damage or loss during transportation.

2. Need to Consider Loading and Customs Clearance Air transport has high time requirements, so under the FCA term, it is necessary to arrange loading in advance and ensure smooth customs clearance procedures.

2. CPT Carriage Paid To Freight Paid to Destination

The CPT trade term means that the seller is responsible for transporting the goods to the destination and bearing the freight costs. In air transport, the seller under the CPT term bears higher freight costs but also has the following advantages

1. Flexible Transport Arrangements Under the CPT term, the seller only needs to focus on transport issues and does not need to consider customs and inspection, improving air transport efficiency.

2. Reduced Disputes Since the freight is included in the price, disputes arising from freight issues are avoided.

However, the CPT trade term also has some disadvantages

1. Freight Fluctuations Affect Pricing Air freight is significantly influenced by market supply and demand; therefore, the freight price under the CPT term fluctuates accordingly, potentially affecting transaction prices.

2. Higher Risks As the seller assumes both freight costs and risks during transportation, this places higher demands on the seller’s creditworthiness and capabilities.

3. Other Trade Terms Applicable to Air Transport

Other trade terms applicable to air transport include DAP Delivered At Place and DDU Delivered Duty Unpaid. These terms have varying advantages and disadvantages depending on specific circumstances, allowing enterprises to choose based on actual needs and risk tolerance.

Conclusion

Selecting the appropriate trade term is crucial for air transport. Enterprises should weigh various factors according to their own situations and market environments to choose the most suitable trade term, thereby reducing trade risks and improving efficiency. Additionally, enterprises should stay informed about international trade dynamics and timely understand relevant trade rules and standards to adapt to the ever-changing international trade environment.