When the topic is about importing exporting goods or services; the keyword that comes to every one’s mind is “COMMUNICATION”. Communication plays a vital role as the process of importing exporting between two different countries and the buyers and far flung sellers located in different countries can be really difficult. It becomes really essential to increase proper understanding and communication in all levels for importing exporting businesses to succeed. Misunderstandings should be avoided as it may land your importing exporting business in great trouble. It may sound trivial at first, but when a lot of countries are involved in the importing exporting business it can cause several problems.
Misunderstandings and language problems were a common predicament that affected a lot of importing exporting businesses decades back as agreements and contracts were often misunderstood leading to unnecessary trouble. The International Chamber of Commerce laid down rules with a few common terms which are mentioned below to explain shipping and importing exporting in detail. They are to be followed by importing exporting business worldwide to prevent misunderstandings in communication.
1. EX-Works
2. FCA (Free Carrier)
3. FOB(Free On Board)
4. FAS(Free Alongside Ship)
5. CIF(Cost, Insurance, Freight)
6. CFR( Cost and Freight)
7. CPT(Carriage Paid to)
8. DAF(Delivered at Frontier)
9. CIP(Carriage and Insurance Paid to)
10. DES(Delivered Ex Ship)
11. DDU(Delivered Duty Unpaid)
12. DEQ(Delivered Ex Quay)
13. DDP(Delivered Duty Paid)
Now importing exporting business all over the world can choose these 13 terms or Incoterms as per their requirements and needs to make terms and conditions clear. The term “DDP(Delivered Duty Paid)” makes it necessary for the seller to make arrangements for expenses incurred duties and taxes, unloading as well as loading expenses, transportation charges, landing charges, customs as well as insurance charges. Although Incoterms cannot be applied to all the aspects of trade, but Incoterms do standardize most of the terms that are used in international trade. “Transfer of risk” is one thing that is dreaded by importing exporting businesses and this is taken care with the rules and implications of the terms defined by Incoterms.
If you are seriously planning an importing exporting business then you have to understand all the 13 terms mentioned above for proper transaction and trades and this can be obtained online in the official website of the “International Chamber Of Commerce”. The above mentioned terms have their own conditions and terms and each are discussed in detail. You should have a thorough understanding about importing exporting subjects before you start business. This will help you greatly when you get into contracts or agreements with different business partners across the globe. International exporters should have a fair idea about the Incoterms because they are accepted by governments worldwide and though there are some small modifications done now and then by the ICC you should keep track of these minute changes.
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