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How To Choose Suitable Shipping Incoterms® For Our Business?
Shipping Incoterms is one of the universal guidelines for international importing and exporting. Compared to Incoterms 2010, the newest version Intercoms 2020 added important interpretation to keeping up with the rapidly developing modern logistics from the rising e-commerce mainly. In this page, we will explain and illustrate the glossary of these 11 shipping terms we may have used one or two terms before. The most important thing is that we are providing much clearer guidance to quickly fix a suitable shipping incoterms for clients’ business and shipping.
The full name of Incoterms is International Commercial Terms. The 11 terms in it are globally recognized trade rules. They are first published in Paris in 1936 by the International Chamber of Commerce (ICC). In these shipping intercoms, we can see:
– Provide a uniform interpretation of the full clauses in common international contracts to be carried in export and import transportation.
– Illustrate the timing for the whole transportation process. Divide costs and risks between buyers and sellers.
– Provide clear instructions in the international business process for different parties involved: Carriers, forwarders, customs brokers, banks, insurance institutions and others involved in a certain shipment.
However, the above 11 Incoterms rules are not mandatory but guidelines agreed upon by both parties to a contract. They are trading terms but law terms. Before the shipment process starts, the sellers and buyers need to agree on dividing obligations, costs and risks.
Shipping Incoterms developed along with modern logistics
The Definition of Each Incoterm
In each below content for explaining separate shipping terms, we are going to divide the obligations, costs and risks for sellers and buyers. To make it clearer for our readers, texts, illustrative pictures and shipping instances will be added to the content.
EXW: Ex Works
FCA: Free Carrier
FAS: Free Alongside Ship
FOB: Free On Board
CFR – Cost and Freight
CIF: Cost, Insurance, and Freight
CPT: Carriage Paid To
CIP: Carriage And Insurance Paid To
DPU: Delivered at Place Unloaded
DAP: Delivered at Place
DDP: Delivered Duty Paid
