In this in-depth guide, we will be diving into the complexities and nuances you, as an SMB, face when importing from China.Read More
Find easy-to-understand explanations of the most common freight forwarding and shipment terms
Incoterms (International Commercial Terms) are a set of international rules developed and published by the International Chamber of Commerce that define the responsibilities of buyers and sellers in international transactions.
Incoterms specify the party responsible for paying duties, taxes, insurance, and other costs associated with shipping goods from one country to another. They also clarify who pays for loading/unloading fees, transportation, storage, and other related expenses.
The terms established by Incoterms provide a clear understanding between buyer and seller on their respective obligations when conducting an international transaction. This helps to minimize misunderstandings over responsibility for delivery or payment issues in international trade.
There are 11 types of Incoterms:
- EXW (Ex Works): The seller is only responsible for making the goods available at their premises.
- FCA (Free Carrier): The seller delivers the goods to a carrier appointed by the buyer with no further responsibility or obligation.
- CPT (Carriage Paid To): The seller pays for transport costs and delivers the goods to a named destination agreed upon with the buyer.
- CFR (Cost and Freight): The seller pays all transportation costs and delivers the goods on board a ship at an agreed port of departure.
- CIF (Cost, Insurance, and Freight): The seller pays all transportation costs and insurance premiums and delivers the goods on board a ship at an agreed port of departure.
- DAT (Delivered at Terminal): The seller is responsible for delivering the goods to an agreed-upon terminal at the named destination.
- DAP (Delivered at Place): The seller is responsible for delivering the goods to a specific location in the buyer’s country, which was agreed upon before shipment.
- DDP (Delivered Duty Paid): The seller delivers the goods to an agreed-upon destination and pays all duties, taxes, and other charges related to importing them into the buyer’s country before delivery.
- FAS (Free Alongside Ship): The seller delivers their goods alongside a ship at an agreed port of loading but has no responsibility or obligation after that point.
- FOB(Free on Board): The seller is responsible for delivering the goods to an agreed-upon port of loading, as well as all related costs until that point.
- CIP (Carriage and Insurance Paid to): The seller covers transport costs and insurance up to a certain point of delivery determined by both parties beforehand.