If you are looking to begin international trade: buying your goods outside of the UK and importing them, there are some terms of delivery which you will agree with your supplier that are important that you understand.
It is generally advised that you use ‘INCOTERMS’ when buying your goods internationally. INCOTERMS are a set of rules which have been issued by the International Chamber of Commerce. The terms outline both the buyer’s and the seller’s obligations and risk under given terms of delivery. The precise nature of these terms and their definitions can prevent misunderstandings between the buyer and seller and their obligations.
The following are the main terms used for delivery (there are many others, but generally these are the ones to know about).
EXW – Ex Works. The buyer is responsible for the door to door transport costs, destination taxes and duties, and marine insurance. It is the buyer’s risk from door to door.
FOB – Free on Board. The seller is responsible for charges up to and over the ‘ship’s rail’ (the ship’s rail being the point where the container is lifted off the quay and over the side of the ship). It is the seller’s risk up to and over the ship’s rail.
The buyer is responsible for the shipping costs from the port of departure to the place of delivery, marine insurance from the port of loading and destination duties and taxes.
CFR – Cost and Freight. The seller is responsible for the FOB charges and ocean freight up to the named port of destination. It is the seller’s risk up to the FOB.
The buyer is responsible for unloading from the ship, duties and taxes, and local delivery to the destination and marine insurance from the FOB.
CIF – Cost Insurance Freight. Same as CFR (above), but the seller arranges and pays for the marine insurance up to the buyer’s door.
We can offer all levels of service, from arranging every single aspect for you (e.g. door to door delivery, insurance, customs clearance, VAT & Duty payments, and so on), or just one part of your shipment for you, for example the ocean freight.
If this has left you baffled and you’re not sure what to do next, then give us a call to discuss your shipment. We’d be happy to help you make sense of this and assist you with arranging your import into the UK – Tel. 02392 756 575. Email: sales@mercatorcargo.co.uk.
