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Understanding Shipping Terms: Definitions and Glossary
Incoterms, or International Commercial Terms, establish clear guidelines that delineate transaction costs and liabilities between buyers and sellers, embodying the modern standards of shipping practices.
Key Functions of Incoterms
Incoterms address crucial aspects related to the delivery of goods from the seller to the buyer. These aspects encompass shipment logistics, import and export customs clearance responsibilities, the allocation of various expenses, and the risk assumed for the product's condition at different stages of transit.
Common Incoterms
FOB (Free On Board)
Under FOB, the seller is responsible for covering local costs and delivering the goods to the specified location designated by the buyer. Risk transfers to the buyer once the goods6424Understanding Incoterms and Shipping Practices
Incoterms Overview
Incoterms, or International Commercial Terms, are a set of rules devised to establish clear guidelines for the transportation of goods from sellers to buyers. They allocate responsibilities, costs, and risks between parties involved in international trade, addressing crucial aspects such as shipping, customs clearance, and transit risk.
Key Shipping Terms
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FOB (Free On Board) Under FOB terms, the seller is obligated to handle local fees and deliver the cargo to the buyer's designated location. Once the goods are loaded onto the transport plane, the risk transfers from the seller to the buyer, who is then responsible for all subsequent freight costs.
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FCA (Free Carrier) With FCA terms, the seller delivers the cargo to the buyer's nominated freight forwarder at a specified location and completes export customs clearance. The buyer assumes all costs and risks from that point onwards.
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EXW (Ex Works) EXW terms place all costs and risks on the buyer. The seller completes their delivery obligation by making the goods available at their location or another designated spot, such as a factory or warehouse.
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DDU (Delivered Duty Unpaid) Under DDU terms, the seller is responsible for transporting the cargo to the buyer's specified location in the importing country, covering all costs except for customs duties and other import-related charges.
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DDP (Delivered Duty Paid) DDP denotes that the seller takes on the responsibility of transporting goods to the buyer's designated place, including handling customs clearance and covering all transportation costs and associated risks, such as customs duties and fees.
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FAS (Free Alongside Ship) Under FAS terms, the seller must deliver the goods alongside the ship specified by the buyer at the port. From that point, the buyer bears all risks and expenses.
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CNF (Cost and Freight) CNF requires the seller to pay for the cost and freight needed to deliver the goods to the agreed destination port. However, the risk transfers to the buyer once the goods are on the ship.
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CIF (Cost, Insurance, and Freight) In addition to covering cost and freight under CIF terms, the seller must also procure marine insurance against the buyer's risk of loss or damage during transit. Delivery obligations are fulfilled once the goods reach the designated ship.
Benefits of Incoterms
Employing Incoterms in international trade can drastically reduce communication barriers between traders from diverse cultural backgrounds, streamline negotiation processes, and expedite trade timeframes. By clearly defining each party's responsibilities and obligations, Incoterms also minimize the likelihood of trade disputes, thereby avoiding potential contract-related disruptions.
Why Choose HUIN International Logistics
At HUIN International Logistics, we are well-versed in all Incoterms and shipping regulations. We offer competitive rates for air, sea, and rail freight services without hidden fees. Our expertise extends to handling hazardous and sensitive cargo. Additionally, we provide exclusive charter services from China to Europe and North America. If you need to ship cargo from China, click the button below, and we will respond within 30 minutes.