About the Trade Terms, in global shipping, you may have a factory or forwarder like us to ask you, what Incoterms should we use. But first, we need to know, what are Incoterms? Are Incoterms mandatory? Kisun Shipping, as a shipping agent with 10 years of experience, in this post, we will share with you The Trade Terms You Need to Know, and definition of trade terms, and how to use them according to your situation.
It’s short for “International Commercial Terms,” the Incoterms are a set of globally recognized trade rules organized into 11 abbreviated terms. First published in Paris in 1936, by the International Chamber of Commerce (ICC), the Incoterms rules provide:
*Uniform interpretation of common contract clauses primarily found in export and import transactions.
*Illustration of the timing and division of costs and risks between buyers and sellers
*Instructions to carriers, forwarders, customs brokers, banks, and other financial institutions involved in shipping goods
The Incoterms rules are not mandatory. They are not laws enacted by governments, but rather, guidelines agreed to by parties to a contract. Ultimately, it’s up to the buyer and the seller to agree to each party’s responsibilities, as well as the cost and risk of a shipment before it takes place. Learn more.
E terms – Departure
EXW – Ex Works (Place of Delivery, Usually Seller’s Premises)
F terms – Main Carriage Unpaid
FCA – Free Carrier (Place of Delivery)
FAS – Free Alongside Ship (Port of Shipment)
FOB – Free On Board (Port of Shipment)
C terms – Main Carriage Paid
CFR – Cost and Freight (Port of Destination)
CIF – Cost, Insurance, and Freight (Port of Destination)
CPT – Carriage Paid To (Place of Destination)
CIP – Carriage and Insurance Paid To (Place of Destination)
D terms – Arrival
DPU – Delivered at Place Unloaded (Place of Destination, Where Seller Unloads)
Formerly: DAT – Delivered At Terminal (Terminal at Port or Place of Destination)
DAP – Delivered At Place (Place of Destination)
DDP – Delivered Duty Paid (Place of Destination)
The Most Incoterms used in global business
EXW: Ex Works (EXW) is the term used to describe the delivery of goods to an available designation at their place of business, normally in their factory, offices, or warehouse. this term requires the buyer to arrange to pick up from the factory and international transport, Buyers select their own shipping agent to arrange from factory to their home delivery
FOB: Free one board, means before cargo arrival at the ship, the seller arranges local delivery to the port, customs clearance till the cargo is on board, then sea freight, air freight, and buyer country custom clearance and delivery paid by buyers.
DDP: Delivered Duty Paid (Place of Destination), means the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The seller bears all the costs and risks involved in bringing the goods to the place of destination and should clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.
Want to know more about shipping from China? Contact us now!
