Answer:

An Incoterm, short for "International Commercial Terms," is a set of standardized international trade terms used in contracts for the sale of goods. These terms define the responsibilities, risks, and costs associated with the delivery and transportation of goods from the seller (exporter) to the buyer (importer).

We recommend that you request separate quotations from the exporter for both FOB and EXW prices. Additionally, please consider the door-to-door service fees provided by us and choose the option with the lowest total cost. It is essential to pay particular attention to situations where the exporter suggests using CIF/CFR terms with the exporter arranging transportation.

You should ensure that the destination port charges are reasonable, that there are no hidden fees, that the transportation plan complies with regulations, and that the promised transportation timeframes are guaranteed."

EXW (Ex Works):

Exporter's Responsibility:

Make the goods available for pickup at their premises or another named place (e.g., factory or warehouse) .

The exporter must package and prepare the goods for transportation.

The exporter is not responsible for any transportation, loading onto a carrier, or export-related costs beyond making the goods available.

Importer's Responsibility:

The importer assumes full responsibility and liability from the point of pickup in China.

They are responsible for arranging and paying for all transportation, including inland transportation within China, ocean or air freight to the destination, and any associated charges.

The importer must handle customs clearance, pay import duties and taxes, and cover all other costs associated with importing the goods.

My purchase is EXW. Who should do the clearance? I have not ever done this.

Answer: If your purchase is Ex Works (EXW), the responsibility for clearance typically falls on the buyer. The supplier's responsibility is limited to preparing the goods for pick-up by the carrier at the factory, and the supplier is not obligated to provide export customs clearance documents or paying any export local charge.

FOB (Free On Board):

Exporter's Responsibility:

Under FOB, the exporter's responsibility extends to delivering the goods to the named port of shipment.

This includes costs related to loading the goods onto the vessel (or aircraft, in the case of FOB Airport).

All costs associated with the departure port, except for freight charges, are the responsibility of the exporter.

The exporter is required to prepare the necessary export documents and cooperate in providing import

customs clearance declaration documents. Booking of cargo space must be initiated by the exporter with

the forwarder, and the bill of lading will be issued to the exporter.

Importer's Responsibility:

The importer assumes responsibility for all costs and risks once the goods are on board the vessel at the named port of shipment in China.

This includes ocean freight charges, marine insurance, unloading the goods at the US port, customs clearance, and inland transportation within the US.

Essentially, the importer is responsible for the entire shipping process from the point the goods are on board the vessel in China.

"FOB + LOADING PORT" indicates that the responsibilities and costs before the

goods cross the ship's rail at the Loading Port are borne by the seller. Therefore,

the seller is obligated to transport the goods to the specified port and cover all

export local charges incurred before the goods are loaded onto the vessel.

CFR (Cost and Freight):

Exporter's Responsibility:
The exporter is responsible for delivering the goods to the named port of destination, covering the costs of transportation to that port, and arranging for the loading of goods onto the vessel.
The exporter is also responsible for obtaining and paying for the freight charges up to the destination port.

Exporter's responsibility ends when the goods are on board the vessel.

Importer's Responsibility:

The importer assumes responsibility for all costs and risks from the point the goods are on board the vessel at the named port of destination.

This includes unloading at the destination port, customs clearance, and inland transportation.

DAP (Delivered at Place):

Exporter's Responsibility:
The exporter is responsible for delivering the goods to the named place of destination (not just the port), including transportation and associated costs.
The exporter arranges for import customs clearance and pays for import duties and taxes (if applicable).

Importer's Responsibility:

The importer assumes responsibility for receiving the goods at the named place of destination.

The importer is responsible for unloading the goods, which may include transportation from the named place to their premises.

DDP (Delivered Duty Paid):

Exporter's Responsibility:
The exporter is responsible for delivering the goods to the importer's premises or another named location in the destination country.
The exporter covers all transportation costs, including customs clearance, import duties, and taxes in the destination country.

Importer's Responsibility:

The importer is primarily responsible for receiving the goods at the named location.

The importer may need to provide access to their premises for delivery.

In summary, the key differences between these Incoterms are the extent of the exporter's responsibility and the point at which the importer assumes responsibility. Under CFR, the exporter is responsible up to the destination port. Under DAP, the exporter takes responsibility for transportation to a specific place but not unloading. Under DDP, the exporter handles all aspects of the delivery, including unloading and customs clearance, making it the most comprehensive option for the importer but often with a higher cost. The choice of Incoterm depends on the parties' agreement and the specific requirements of the transaction.