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Trade terms (Incoterms Rules)

Here you have a few general trade Terms that you need to know first to avoid any payment mistake.

1. EXW (Ex Works): This means the price they quote only delivers the goods from their factory. So, you need to arrange shipping to pick up and transport the goods to your doorstep.

 

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Some buyers choose EXW because it offers them the lowest cost from the seller. However, this Incoterm may end up costing buyers more in the end, especially if the buyer doesn’t have negotiation experience in the origin country.

2. FOB (Free On Board): It is usually used for total container shipping. It means the supplier will deliver the goods to China export seaport, finish custom declaration and the goods really to ship by your freight forwarder.

 

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This option can often be the most cost-effective for buyers since the seller would take care of much of the transport and negotiation in their origin country.
So FOB Price = EXW + Inland charge for the container.

3. CFR (Cost and Freight): If the supplier quotes for CFR price, they will deliver goods to China port for export. They would also arrange the Ocean freight to the destination port (your country’s seaport).

 

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After goods arrive at the destination port, the buyer must pay for unloading and any subsequent charges to get the goods to their final destination.
So CFR = EXW + Inland charge + Shipping fee to your port.

4. DDP (Delivered Duty Paid): in these incoterms, the supplier will do everything; they would,
● Supply the items
● Arrange export from China and import to your country
● Pay all the customs fees or import duties
● Deliver to your local address.

 

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Although this likely will be the most expensive Incoterm for a buyer, it’s also an all-inclusive solution that takes care of just everything. However, this Incoterm can be tricky to navigate as a seller unless you are familiar with the destination country’s customs and import procedures.


Post time: Nov-29-2022

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