Entering the world of global trade and ocean shipping, means understanding your roles and responsibilities in importing or exporting goods – and that requires an understanding of Incoterms.
Incoterms are rules – set by the International Chamber of Commerce – that define the terms of trade for the sale of goods all around the world. They lay out the seller’s and buyer’s obligations as part of a contract. If you are shipping your cargo across the world, you must understand how Incoterms can vary.
Each Incoterm option plays a factor in the overall cost of the goods and who is responsible for what part of the shipping journey costs.
For example, if you chose to work with DAP (Delivered at Place) terms, then the seller would be responsible for the full costs of shipping. Costs would normally be added within the invoice for the goods the buyer is purchasing.
If parties agree on FOB (Free On Board) terms, the Buyer can control when and who they ship with, taking on the associated costs of shipping from the origin port. The seller would take on the costs and responsibility of having the container trucked to port and laden on board the vessel chosen by the buyer.
Please be aware that Incoterms also affect the liability. The C-Terms (CIF, CFR) are also called 2-point-clauses because here the transition of the risk and the transition of the prices differ.
Find out more about Incoterms®.