Global Shipping Experts - With Over 50 Years Experience
26Jul

Let’s talk Incoterms

NicholasProctor


Buying goods from China (or anywhere for that matter) can be a tricky exercise. It is very important to be specific about your preferred buying terms. Incoterms (International Commerce Terms) are an integral part of international trade. We would suggest the best Incoterm to purchase your goods under is FOB – Free on board. Please see our simple explanation of the most common Incoterms below..

EXW – Ex-Works

· Ex works is when the seller places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.).

· The seller does not need to load the goods on any collecting vehicle. Nor does it need to clear them for export, where such clearance is applicable.

FOB – Free On Board

· The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered.

· The risk of loss of or damage to the goods passes when the products are on board the vessel. The buyer bears all costs from that moment onwards.

CFR – Cost and Freight

· The seller delivers the goods on board the vessel or procures the goods already so delivered.

· The risk of loss of or damage to the goods passes when the products are on board the vessel.

· The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

CIF – Cost, Insurance and Freight

· “Cost, Insurance and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel.

· The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. ‘

· The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.”

Please click on the link below to view a graph which illustrates everything visually.

Incoterms graph

If you do have any questions about Incoterms, please do not hesitate to contact us on 07 3267 0575 and we’d be happy to further explain..

 

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Willship International

3A/153 Saint Vincents Road, Queensland 4014, Australia