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Here at Roberts, we provide a one-stop-shop solution to all of our clients. But what happens once the order is placed and completed? Below is a handy outline of shipping options that can be used to deliver your finished product.

International Commercial Terms or Incoterms are the official International Chamber of Commerce (ICC) rules that explain trade terms. They are a voluntary, authoritative, globally-accepted and adhered-to text for determining the responsibilities of buyers and sellers for the delivery of goods under sales contracts for domestic and international trade. Incoterms closely correspond to the U.N. Convention on Contracts for the International Sales of Goods. Incoterms are known and implemented by all major trading nations.

Incoterms are only part of the whole sales contract. They don’t say anything about the price to be paid or the method of payment that is used in the transaction. Furthermore, Incoterms don’t deal with the transfer of ownership of the goods, breach of contract, or product liability; all of these issues need to be considered in the contract of sale. Also, Incoterms can’t override any mandatory laws.

The following are the most commonly used Incoterms:

Incoterms 2010, came into effect on January 1, 2011, and consists of 11 incoterms. But below are the most common used Incoterms:

Incoterms that apply to any mode of transport are:

EXW (Ex Works)

  • Minimum requirements for the seller
  • Seller’s cost and risk end when seller places the goods at the disposal of the buyer at the seller’s premises or another named place
  • Loading is buyer’s responsibility
  • Pre-carriage is buyer’s responsibility
  • Main-carriage is buyer’s responsibility

DAT (Delivered at Terminal)

  • Seller’s risks end once goods are unloaded from the arriving means of transport and placed at the disposal of the buyer at a named terminal at port or place of destination
  • The Seller must contract for the costs of carriage to the named terminal at the agreed port or place of destination
  • Suggestion: when using this term it is recommended to specify as clearly as possible the terminal at the agreed port or place of destination, as the risks to that point are for the account of the Seller

DAP (Delivered at Place)

  • The seller’s risks end when goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading
  • The Seller bears the costs for the carriage of the goods to the named place of destination or the agreed place
  • Suggestion: when using this term, make clear which party is responsible for unloading and any type of on-carriage (such as air, ocean…etc)

DDP (Delivered Duty Paid)

  • The Seller bears:
    • All costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for the export but also for import
    • Has to pay any duty for both export and import and has to carry out all customs formalities
    • The Seller will also need to bear the VAT (Value Added Tax)!

Incoterms that apply to sea and inland waterway transport only:

FOB (Free on Board)

  • Loading: truck, train, barge, etc. at Seller’s facility is the seller’s responsibility
  • Pre-carriage: Seller’s responsibility
  • Vessel loading: Seller’s responsibility
  • Seller’s cost and risk end when the goods are delivered on board the vessel nominated by the Buyer
  • Suggestion: For containerized shipments, consider FCA showing the carrier’s terminal at the port as the designated place

CFR (Cost and Freight)

  • Loading: Truck, train, barge, etc. at Seller’s facility is the Seller’s responsibility
  • Pre-carriage: Seller’s responsibility
  • Vessel loading: Seller’s responsibility
  • Main carriage: Seller’s responsibility (however, Seller is not responsible for condition of goods while they are in main carriage transit)
  • Seller’s risks for loss and damage end when the goods are on board the vessel
  • The Seller must contract and pay the costs and freight necessary to bring the goods to the named port of destination
  • Suggestion: for containerized shipments, consider CPT (Carriage Paid To) showing the destination port or an inland location on the buyer’s side

CIF (Cost, Insurance, and Freight)

  • Pre-carriage: Seller’s responsibility
  • Vessel loading: Seller’s responsibility
  • The Seller’s risks of damage or loss end when 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
  • Insurance: Seller must effect an insurance policy on behalf of the buyer
  • Main carriage: the contract of main carriage and payment are the seller’s responsibility

Incoterms are only part of the process. our Account Managers and Order Services Representatives are here to help you from the beginning of your project to choosing the best shipping method. Contact us today to see our new Showroom and hear about how we can help make your cosmetic dreams a reality.

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