If you’re researching shipping prices in China, you will come across incoterms. An incoterm is an abbreviation for International Commercial Terms. They outline the responsibilities, costs and risks of the buyer and the seller. Here we’ve outlined the 11 main terms which are:
EXW -EX WORKS
Here the seller only has one responsibility. This is to make sure the buyer can collect the goods from their premises. It’s actually the buyer who has all the responsibility and risk. The buyer must pay all the costs of loading and shipping the goods.
DAP – DELIVERED AT PLACE
Here the seller has the responsibility, including the risks and the costs of delivering the goods to a specified address. The buyer’s only responsibility is to ensure import clearance and unload the shipment.
DDP – DELIVERED DUTY PAID
DDP puts the responsibility on the seller for the shipping process. The seller will need to cover all the costs of transporting the goods. This includes import clearance and the payment of import duties and taxes. The buyer only has to make sure that the goods are unloaded once they have been delivered.
FCA – FREE CARRIER
Here the seller is responsible for the goods and export clearance. But only up to when the goods are delivered to a specific location. This could be a port terminal or airport. The consignment is then passed to a carrier. The costs and risk become the responsibility of the carrier who will have been nominated by the buyer. If there is more than one carrier, it is the first carrier who retains responsibility.
CPT – CARRIAGE PAID TO
This is similar to FCA. The seller bears most of the costs and the responsibility. This includes clearing the goods for export. The difference is that with CPT the seller also pays the delivery costs. The buyer’s only responsibility is to receive the goods.
DAT – DELIVERED AT TERMINAL
The seller takes on the responsibility, costs and the risks from when the goods leave the warehouse until the goods are unloaded and cleared for customs at a named terminal. The buyer then takes over the responsibility for import clearance and loading and transferring the goods to another location if necessary.
DPP – DELIVERED DUTY PAID
Responsibility for the costs including the duties regarding export and import is with the seller up to delivery at an agreed location. The buyer only has the responsibility of unloading the goods after delivery.
FAS – FREE ALONGSIDE SHIP
Here the seller pays all the costs. They are responsible for the delivery of the goods up to when they have been delivered and unloaded alongside the ship. From then on it is the buyer’s responsibility to load the goods on to the ship, take care of export and import clearance and finally, delivery to its destination.
CFR – COST AND FREIGHT
The seller pays all the costs of bringing the goods to the buyer’s port of destination. However, as soon as the goods are on the ship, they become the buyer’s risk. Plus the buyer is responsible for the costs of unloading and delivery.
CIF – COST INSURANCE AND FREIGHT
This is the same as CFR with one difference. The seller must also cover the cost for minimum insurance cover. If the buyer wants better cover, they will have to pay for this themselves.
FOB – FREE ON BOARD
The seller has the responsibility and the risk for the goods up until they have been loaded onto the ship. Once the goods are loaded the responsibility is in the hands of the buyer. This includes the payment of freight costs to get the goods to the buyer’s location.
If you are using BFCN to buy your products in China we will handle the import of your item based on FOB or EXW to our own office and then deliver to your door in your home country. This means you will not have to worry about the above Incoterms however we always promote learning as much as possible about the buying process!!
Happy New Year! ~~ Xin Nian Kuai Le ~~