Main trade (logistical) terms  

Ex works: the seller places cotton at the disposal of the buyer at the agreed named location (ginning factory, warehouse etc.) It is the buyer’s responsibility to arrange and pay for clearance of the goods for export and loading on to a mode of transport.

Free carrier (FCA): the seller attends to the clearance formalities for export, and delivers to the nominated carrier at the named location. The sellers are responsible for the loading only if this is conducted at their premises.

Free on board (FOB): applies only to shipment by sea or inland waterway. The seller clears the consignment, and delivery is effected when it passes the ship’s rail at the contracted port of shipment. At this point responsibility for the cotton passes to the buyer.

Cost and freight (CFR): applies only to shipment by sea or inland waterway. The seller clears the cotton and pays for the freight. As with FOB, the cotton is delivered when the consignment passes the ship’s rail at the nominated port of shipment. All risks for loss or damage or any costs arising from this point pass to the buyer.

Cost, insurance and freight (CIF): This applies only to shipment by sea or inland waterway. The seller clears the cotton and it is delivered when the consignment passes the ship’s rail at the nominated port of shipment. All risks for loss or damage, or any costs arising from this point, pass to the buyer. However, the seller has to procure marine insurance to cover the buyer’s risk of loss or damage during carriage.

Under ICA Rules the seller is responsible for any country damage on all the above terms.

Carriage paid to ____ (CPT): applies to all modes of transport. The seller clears the cotton and pays the delivery costs to the carrier and transport costs to the named destination and place of delivery. All risks and costs are the seller’s.

Landed mill or delivered mill: the seller delivers cotton to a specified mill at its own cost. This term is usually used for sales to domestic mills in cotton producing countries.

The International Chamber of Commerce publishes Incoterms 2000, which contains an expansive listing of trade terms and specifies the responsibilities of the parties under contracts for the carriage of goods.