What are the most favorable Incoterms?

The Incoterms more favorable to buyers are DAT, DAP, and DDP . With these “D terms,” the buyer is responsible for nothing until the goods arrive in the buyer's country. For small businesses, FCA might represent an attractive compromise.

Which Incoterms are cheapest for the seller?

Goods shipped EXW will usually be cheaper FOB since Free on Board would have the supplier bear the costs of transportation, handling, and customs clearance. EXW terms, however, are often riskier for the seller since they are responsible for the goods until they reach their destination.

Which Incoterms places most responsibility on the seller?

Delivered Duty Paid (DDP) – This Incoterm places the most responsibility on the seller, who is responsible for all transportation, costs, and risk to a named place, typically the buyer's warehouse. The shipments arrive to the buyer Customs cleared and duty paid.

What Incoterms is more advantageous for the seller/exporter?

For an international operation, the most advantageous Incoterm for the exporter is EXW (Ex Works) , because he only has to deal with putting the goods in condition to be transported in his own facilities.

What Incoterms does FedEx use?

Typical examples of Incoterm® rules for any mode of transportation include Delivered at Terminal (DAT), Delivered Duty Paid (DDP), and Ex Works (EXW) .

What is the risk of the seller in Incoterms?

Even if the buyer unloads the goods on the DPU incoterm, the seller bears the risk until the goods are unloaded . This is a common reason for dispute as goods do shift in transit, and damages can be incurred by this and/or improper handling by the unloading staff.

Why is EXW the best Incoterm?

Under the EXW Incoterms, the seller's responsibilities are incredibly low . Essentially, their only requirement is to ensure that the cargo is packaged so it is ready for export, and the goods can be collected from their location. For most shipments, this means the products are already packed into export cartons.

What are the 6 Incoterms commonly used?

In this article, we will delve into the basics of Incoterms, focusing on six commonly used terms: Ex Works (EXW), Free On Board (FOB), Cost and Freight (CFR), Cost Insurance and Freight (CIF), Delivered At Place (DAP), and Delivered Duty Paid (DDP) .

Which Incoterms are the best for food products?

When it comes to Food Importing, perhaps the most important Incoterm® is DPU . The wording was altered from Delivered At Terminal because buyers can and often do request that their goods be unloaded at a destination that is not a terminal.

Best Incoterms for sellers | iContainers (2024)

How to choose an Incoterm

The two key parties involved in an international trade transaction are the buyer and the seller. Though both are entering in a mutually-benefitting sale contract, there are conditions under which the contract may take place determine the different roles and responsibilities of each party and their costs.

Incoterms are are a set of pre-defined international rules published by the International Chamber of Commerce which determine the contractual clauses to be used in the sales transaction. They define the conditions of the transport of shipment and the different responsibilities of the importer and exporter.

Best Incoterms for sellers

In total, there are 11 Incoterms that you can choose for your transaction. As a supplier/seller, there are a few Incoterms that are more advantageous to you as it gives you greater control over total shipping costs.

CFR-CIF: Cost and Freight - Cost, Insurance and Freight

The CFR Incoterm and the CIF Incoterm are generally good options for the seller as they’re competitive and do not involve too many risks. Under these Incoterms, you have control over the international shipping costs all the way to the destination port. This gives you the flexibility to opt for more cost-effective shipping options such as the best routes, rates, and transit times.

DDP-DAP: Delivered Duty Paid - Delivered at Place

Under the DDP Incoterm and DAP Incoterm, the seller is responsible for delivering the goods to the buyer’s warehouse or storage in the destination country. This means that since you will be in control of a large part of the shipping process, including what happens in the destination country, you should make sure that you’re familiar with the laws and regulations of the importing country. Make sure your freight forwarder has presence in the destination country to help you faciliate things.

These two Incoterms may seem to provide more control and competitiveness but this also means greater responsibilities and risks especially when operating in a country you’re unfamiliar with.

FOB: Freight on Board

The FOB Incoterm is one of the most commonly-used Incoterm in an international sale. When working under FOB, the seller is responsible until the goods are loaded onto the vessel at the port of origin. This means you have very little control over shipping times and costs. However, this may work for suppliers who prefer not to negotiate freight rates with their freight forwarders or simply see no benefit in keeping track of the shipment.

When negotiating an Incoterm with your buyer, remember that the Incoterm that gives you the most control will give your buyer the least control and vice versa. Your supplier will probably want to negotiate an Incoterm that’s best for him as a buyer. Whatever Incoterm you choose, try to come to an agreement that’s mutually-beneficial and make sure to properly define all points are clearly defined to avoid problems.

Best Incoterms for sellers | iContainers (2024)

How to choose an Incoterm

Best Incoterms for sellers

CFR-CIF: Cost and Freight - Cost, Insurance and Freight

DDP-DAP: Delivered Duty Paid - Delivered at Place

FOB: Freight on Board

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