Author name: Sujith

FOB (Free on Board) is one of the 11 Incoterms defined in the Incoterms 2020, published by the International Chamber of Commerce (ICC). It is an Incoterm that is commonly used in international trade when the buyer and seller are located in different countries and the buyer is responsible for arranging and paying for the transportation of the goods. Under FOB, the seller is responsible for delivering the goods on board a vessel at a named port of shipment. The buyer is responsible for the loading of the goods on the vessel, the transportation costs and risks from that point on, including arranging and paying for the transportation, obtaining any necessary export or import licenses and permits, and paying any applicable duties or taxes. Responsibilities and Obligations of Buyer and Seller The seller’s responsibilities under FOB include: Delivering the goods on board a vessel at a named port of shipment Loading the goods onto the transport vehicle (if agreed upon) Obtaining any necessary export licenses or permits The buyer’s responsibilities under FOB include: Arranging and paying for the loading of the goods on the vessel Arranging and paying for transportation of the goods Obtaining any necessary import licenses or permits Paying any applicable duties or taxes Bearing the risk of loss or damage to the goods once they are loaded onto the vessel Advantages of using FOB include: The buyer has more control over the transportation arrangements as they can choose the carrier and mode of transportation The seller is not responsible for loading the goods onto the vessel Disadvantages of using FOB include: The buyer bears all the risks and costs associated with the transportation of the goods The buyer is also responsible for obtaining any necessary licenses or permits and paying any applicable duties or taxes The buyer is also responsible for arranging and paying for the loading of the goods onto the vessel, which can be a costly and complex process. Examples of when to use FOB include: When the buyer is located near a port and has the capability to arrange for the loading of the goods onto the vessel When the buyer has established relationships with carriers and can obtain favorable transportation rates When the goods are bulky or heavy and require special handling or equipment to load or unload When the buyer is importing goods into a country with a well-established customs clearance process and minimal import restrictions. It’s important to note that FOB is a more advanced Incoterm than EXW, FCA, and FAS and it shifts some of the responsibilities and risks from the seller to the buyer. It’s important for the buyer to carefully consider their capabilities and resources before choosing to use FOB in a trade agreement, and to consult with legal and logistics experts to ensure compliance with laws and regulations. Additionally, it’s important to agree and specify the exact place of delivery, the name of the port, and any other relevant details in the sales contract. It’s also important to note that the point at which the risk of loss or damage to the goods passes from the seller to the buyer under FOB is when the goods are loaded onto the shipping vessel, which can be different from other Incoterms where the risk passes at different points, such as at the seller’s premises or at the named place of delivery.

FAS (Free Alongside Ship) is one of the 11 Incoterms defined in the Incoterms 2020, published by the International Chamber of Commerce (ICC). It is an Incoterm that is commonly used in international trade when the buyer and seller are located in different countries and the buyer is responsible for arranging and paying for the transportation of the goods.Under FAS, the seller is responsible for delivering the goods alongside a vessel at a named port of shipment. The buyer is responsible for the loading of the goods on the vessel, the transportation costs and risks from that point on, including arranging and paying for the transportation, obtaining any necessary export or import licenses and permits, and paying any applicable duties or taxes. Responsibilities and Obligations of Buyer and Seller The seller’s responsibilities under FAS include: Delivering the goods alongside a vessel at a named port of shipment Loading the goods onto the transport vehicle (if agreed upon) Obtaining any necessary export licenses or permits The buyer’s responsibilities under FAS include: Arranging and paying for the loading of the goods on the vessel Arranging and paying for transportation of the goods Obtaining any necessary import licenses or permits Paying any applicable duties or taxes Bearing the risk of loss or damage to the goods once they are loaded onto the vessel Advantages of using FAS include: The buyer has more control over the transportation arrangements as they can choose the carrier and mode of transportation The seller is not responsible for loading the goods onto the vessel Disadvantages of using FAS include: The buyer bears all the risks and costs associated with the transportation of the goods The buyer is also responsible for obtaining any necessary licenses or permits and paying any applicable duties or taxes The buyer is also responsible for arranging and paying for the loading of the goods onto the vessel, which can be a costly and complex process. Examples of when to use FAS include: When the buyer is located near a port and has the capability to arrange for the loading of the goods onto the vessel When the buyer has established relationships with carriers and can obtain favorable transportation rates When the goods are bulky or heavy and require special handling or equipment to load or unload When the buyer is importing goods into a country with a well-established customs clearance process and minimal import restrictions. It’s important to note that FAS is a more advanced Incoterm than EXW and FCA and it shifts some of the responsibilities and risks from the seller to the buyer. It’s important for the buyer to carefully consider their capabilities and resources before choosing to use FAS in a trade agreement, and to consult with legal and logistics experts to ensure compliance with laws and regulations. Additionally, it’s important to agree and specify the exact place of delivery and any other relevant details in the sales contract.

FCA (Free Carrier) is one of the 11 Incoterms defined in the Incoterms 2020, published by the International Chamber of Commerce (ICC). It is an Incoterm that is commonly used in international trade when the buyer and seller are located in different countries, and the buyer is responsible for arranging and paying for the transportation of the goods. Under FCA, the seller is responsible for delivering the goods to the carrier nominated by the buyer at the seller’s premises or another named place. The buyer is responsible for the transportation costs and risks from that point on, including arranging and paying for the transportation, obtaining any necessary export or import licenses and permits, and paying any applicable duties or taxes. Responsibilities and Obligations of Buyer and Seller The seller’s responsibilities under FCA include: Delivering the goods to the carrier nominated by the buyer at the seller’s premises or another named place Loading the goods onto the transport vehicle (if agreed upon) Obtaining any necessary export licenses or permits The buyer’s responsibilities under FCA include: Arranging and paying for transportation of the goods Obtaining any necessary import licenses or permits Paying any applicable duties or taxes Bearing the risk of loss or damage to the goods once they are delivered to the carrier Advantages of using FCA include: The buyer has more control over the transportation arrangements as they can choose the carrier and mode of transportation The buyer can arrange for the goods to be shipped directly to the final destination, avoiding the need for transshipment The seller is not responsible for obtaining export licenses or permits Disadvantages of using FCA include: The buyer bears all the risks and costs associated with the transportation of the goods The buyer is also responsible for obtaining any necessary licenses or permits and paying any applicable duties or taxes Examples of when to use FCA include: When the buyer has established relationships with carriers and can obtain favorable transportation rates When the buyer is importing goods into a country with a well-established customs clearance process and minimal import restrictions When the buyer is experienced and well-equipped to handle the transportation arrangements When the goods are bulky or heavy and require special handling or equipment to load or unload It’s important to note that FCA is a more advanced Incoterm than EXW and it shifts some of the responsibilities and risks from the seller to the buyer. It’s important for the buyer to carefully consider their capabilities and resources before choosing to use FCA in a trade agreement, and to consult with legal and logistics experts to ensure compliance with laws and regulations. Additionally, it’s important to agree and specify the exact place of delivery and any other relevant details in the sales contract.

EXW (Ex Works) is one of the 11 Incoterms defined in the Incoterms 2020, published by the International Chamber of Commerce (ICC). It is the simplest and most basic of the Incoterms and is often used when the buyer is experienced and well-equipped to arrange for the transportation of the goods. Under EXW, the seller is only responsible for making the goods available at their premises. The buyer is responsible for all transportation costs, import clearance formalities and risks associated with the goods from that point on. This includes arranging for and paying for transportation, loading the goods onto the transport vehicle, obtaining any necessary export or import licenses and permits, and paying any applicable duties or taxes. Responsibilities and Obligations of Buyer and Seller Making the goods available at their premises Loading the goods onto the transport vehicle (if agreed upon) Obtaining any necessary export licenses or permits The buyer’s responsibilities under EXW include: Arranging and paying for transportation of the goods Obtaining any necessary import licenses or permits Paying any applicable duties or taxes Bearing the risk of loss or damage to the goods once they are available at the seller’s premises Advantages of using EXW include: The buyer has complete control over the transportation arrangements The buyer can choose the mode of transportation and the carrier The buyer can arrange for the goods to be shipped directly to the final destination, avoiding the need for transshipment Disadvantages of using EXW include: The buyer bears all the risks and costs associated with the transportation of the goods The buyer is also responsible for obtaining any necessary licenses or permits and paying any applicable duties or taxes The buyer may also need to arrange for unloading the goods from the transport vehicle at the final destination Examples of when to use EXW include: When the buyer is experienced and well-equipped to handle the transportation arrangements When the buyer has established relationships with carriers and can obtain favorable transportation rates When the goods are bulky or heavy and require special handling or equipment to load or unload When the buyer is importing goods into a country with a well-established customs clearance process and minimal import restrictions It’s important to note that while EXW may be the simplest and most basic of the Incoterms, it also shifts the most responsibilities and risks to the buyer. It’s important for the buyer to carefully consider their capabilities and resources before choosing to use EXW in a trade agreement, and to consult with legal and logistics experts to ensure compliance with laws and regulations.

DPU (Delivered at Place Unloaded) In the realm of cross-border e-commerce, the terms DDP and DAP for customs clearance are frequently mentioned. But what exactly do these terms entail, and why are they of significant importance to you as an online retailer? We’ll provide you with comprehensive insights! Additionally, we’ll elucidate how leveraging DDP can enable you to expand your sales further. Incoterms is short for ‘International Commercial Terms,’ encompassing the established rules governing aspects like payment and delivery terms in conventional trade. Among the widely recognized Incoterms, Incoterms DDP and Incoterms DAP stand out as the most prevalent. DAP, or Delivery at Place DAP, or Delivery at Place, entails that for shipments under the Incoterms DAP framework, the seller bears the responsibility for delivering the goods, including transport costs, to the specified destination – typically the buyer’s premises. It is crucial to note that the expenses associated with performing essential import formalities are expressly excluded. The buyer or recipient is obliged to cover all duties and taxes related to the import in the destination country. When the value of an order surpasses a certain threshold, VAT becomes applicable, necessitating customs clearance in the destination country. Regarding payments for DAP Incoterms, if VAT and/or customs duties exceed the exemption limits, the recipient must settle all duties upon receiving the shipment. In instances where the recipient is unavailable during the delivery or is unable to make the required payment, a notification will be left to facilitate the collection of the shipment. However, many shoppers may not be aware that they have ordered from abroad and may incur VAT liabilities outside the EU zone. The absence of a clearly defined Incoterm during the online shopping process can lead to customer dissatisfaction and negative ratings for your online store. It is imperative to transparently communicate the applicable Incoterms to avoid such issues and enhance customer satisfaction. DDP or Delivery Duty Paid Under the Incoterms DDP, the seller is obligated to bear the expenses and risks associated with delivering the goods to a destination within the importing country. This encompasses fulfilling all necessary formalities, covering import duties, and meeting additional costs. DDP shares similarities with DAP, but it goes a step further by encompassing the pre-payment of customs duties and taxes before the actual delivery. In the context of DDP Incoterms, the burden of payment falls on the shipper, sparing the customer from any costs upon receipt of the shipment. The goods are delivered duty-free, akin to a domestic delivery. The shipper assumes the responsibility for customs clearance, implying that if any import duties are applicable, they will be invoiced to the shipper, encompassing both customs duties and VAT.