The difference between free port and assigned port
“Free port” and “assigned port” are terms easily encountered in the world of trade and shipping. But what is their meaning? What are the differences between one and the other? In this article, we investigate all the basic aspects related to these two terms and the implications they have for your shipping.
What does assigned port mean?
The term “free port” refers to a shipment in which the seller is responsible for paying shipping costs until the goods arrive at their destination. If we are talking about international shipments, we can refer to Incoterms 2020 and link this wording to the DDP (Delivered Duty Paid) clause.
In other words, the seller assumes all the risks and costs associated with shipping the goods:
– arranging the transportation of the goods
– verifying that the packaging of the goods is adequate and correct for transportation
– paying all costs associated with the transportation itself (including insurance costs).
Once the goods arrive at their destination, responsibility shifts to the consignee, who is responsible for any damage or loss that occurs after the goods have been delivered to his or her address.
What does assigned port mean?
Instead, “assigned port” refers to a type of shipment in which the consignee must assume responsibility for the goods. He or she will therefore have to assume all the risks and pay all the shipping costs, from departure to arrival at the destination.
In this case, the buyer will then have to:
– arrange for the transportation of the goods
– pay all costs associated with the transportation itself
– ensure that the goods are properly packed for transport.
If one moves in the dimension of international trade one must refer to the Incoterm EXW (Ex Work).
Who pays for the transportation?
Who pays for the transportation is precisely the differentiating issue between free port and assigned port, in the world of logistics. In the case of free port, it is the seller who bears the costs associated with shipping the goods, while in the case of assigned port, it is the buyer’s burden. In any case, this type of choice always depends on the agreements between the parties.
Ordinary shipping and COD shipping
For those outside the industry, it is more common to encounter the terms “ordinary shipping” and “COD shipping.” In ordinary shipping, payment is made before the goods are shipped, while in COD shipping, payment is made upon delivery. However, these two terms are not assimilated with the terms being discussed in this article.
For this reason, it is important for sellers and buyers to be aware of the implications of these terms before agreeing to a transaction. Making sure you have a clear understanding of shipping terms can help avoid confusion or problems during the shipping process.
If you have any concerns or questions about this, you can refer to us: contact us!