Air Freight Incoterms

Precise communication and clarity regarding the terms of a transaction are necessary, especially when dealing with air freight incoterms, a mode of transportation that often involves complex logistics and international regulations. 

To address these challenges, the International Chamber of Commerce (ICC) has established a series of standardized trade terms known as Incoterms. 

They provide a common language for defining the obligations, risks, and costs associated with the delivery of goods between buyers and sellers. 

What is Air Freight?

Air freight, as the name suggests, is the transportation of goods via aircraft. It is a rapid and efficient mode of transportation, often used for urgent shipments, valuable goods, and perishable items. 

Compared to other modes of transportation, air freight offers several advantages: 

Airplanes can travel long distances at high speeds, significantly reducing transit times, which is particularly beneficial for time-sensitive shipments that need to reach their destination quickly. 

Air freight incoterm is generally more reliable than other modes of transportation, with fewer disruptions and delays due to weather conditions or infrastructure issues, which makes it a suitable option for shipments that cannot afford any delays. 

Accessibility in air freight is available to almost any destination in the world, making it a versatile option for international trade and is especially useful for reaching remote or landlocked regions that may be difficult to access by other means of transportation. 

With detailed tracking information available throughout the journey, allowing you to monitor the progress of your shipment and identify any potential issues early on. 

What are Incoterms?

Incoterms, or International Commercial Terms, are a series of standardized trade terms published by the International Chamber of Commerce (ICC). These terms serve as a common language for international trade, providing a clear and concise framework for defining the obligations, risks, and costs associated with the delivery of goods between buyers and sellers. 

By using Incoterms, parties involved in international trade can avoid misunderstandings and disputes by establishing a clear understanding of trade by providing a consistent and predictable framework that is recognized and understood by businesses worldwide. 

Incoterms are necessary for drafting international sales contracts, as they provide a clear and unambiguous basis for negotiating and documenting the terms of the transaction. They also help to allocate risks and costs between the buyer and seller, ensuring that each party is aware of their obligations and can plan accordingly. 

Incoterms for Air Freight

Several Air Cargo Incoterms that are applicable to air freight transactions. 

EXW (Ex-works) 

Under EXWorks, the seller’s responsibility ends at their premises. The buyer bears all costs and risks from the time the goods are ready for collection. 

This means that the buyer is responsible for arranging pickup of the goods from the seller’s factory, as well as all transportation costs to the destination. 

The seller is not obligated to load the goods onto the transport vehicle or clear them for export. 

CIP (Carriage and insurance)

Under Carriage and Insurance Paid to, the seller is responsible for arranging both the carriage and insurance of the goods to a named destination, meaning that the seller will make the necessary arrangements to transport the goods to the agreed-upon location and obtain insurance coverage to protect them against loss or damage during transit. 

Once the goods have been delivered to the named destination, the buyer assumes the risk of loss or damage. 

For example, if the seller agrees to deliver the goods to the buyer’s warehouse under CIP, the seller will then pay the seller for the goods and transportation costs. However, if the goods are damaged during transit, it is the buyer’s responsibility to file a claim with the insurance company.

CPT (Carriage Paid To) 

Under Carriage Paid to, the seller is responsible for arranging carriage to a named destination, meaning that the seller will make the necessary arrangements to transport the goods to the agreed-upon location. 

However, the seller is not responsible for the risk of loss or damage after the goods have been delivered to the named place, meaning that the buyer bears the risk of loss or damage from that point onward. 

In other words, CPT places the responsibility for the transportation of the goods on the seller, but the risk of loss or damage is transferred to the buyer once the goods have reached the agreed-upon destination. 

This is different from CIP, where the seller is responsible for both carriage and insurance. 

DDP (Delivered Duty Paid)

Delivered duty paid is where the seller is responsible for delivering the goods to the named place, cleared for import, and bearing all costs and risks until the goods are delivered. 

For example, the seller arranges for air freight, customs clearance, and delivery to the buyer’s warehouse. The buyer pays a fixed price for the goods, icnluding all import duties and taxes. 

DAP-Delivered At Place

Delivered at place or DAP means that the seller is responsible for delivering the goods to the named place, cleared for import. 

The buyer bears the risk of loss or damage after the goods have been delivered to the named place. 

For example, similar to DDP, but the buyer is responsible for import customs clearance. 

FCA (Free Carrier) 

Under FCA, FCA free carrier, the seller’s responsibility ends when the goods are handed over to the named carrier at the named place. This means that the seller is responsible for delivering the goods to the agreed-upon location and placing them on the transport vehicle, but not for loading them onto the vehicle. 

Once the goods have been handed over to the carrier, the buyer assumes responsibility for all subsequent costs and risks, including transportation, customs clearance, and insurance. 

DPU (Delivered at Place Unloaded) 

Delivered at Place Unloaded or DPU meaning the seller is responsible for delivering the goods to the named place and unloading them from the transporting vehicle. The buyer bears the risk of loss or damage after the goods have been unloaded.

For example, the seller arranges for air freight and delivery to the buyer’s warehouse, including unloading the goods from the truck.