When shipping goods internationally, it is important to have a clear understanding of who claims ownership and responsibility for the goods while in transit and through arrival at the customs port.
To help make things more clearly for the consignor and consignee, the International Chamber of Commerce in 1936 created 13 International commercial terms (Incoterms for short) to “define the roles, responsibilities and transportation costs between the seller and buyer of goods for the purpose of shipping goods.” These Incoterms are recognized by governments, freight forwarders, and attorneys around the world making it easy for buyers and sellers to understand each other.
While it may not be necessary to master all of the Incoterms, it is important to become familiar and have an understanding of them. Below are the most common of the 13 terms to get started with.
1. FOB Shipping
The most widely used shipping method is FOB 중국배대지 shipping. FOB stands for ‘Free On Board’ or ‘Freight On Board’. For this shipping, the buyer takes charge of the consignment as soon as it leaves the seller’s shipping dock and therefore the buyer is in charge of the delivery. As soon as the goods leave the seller’s dock, the seller should record a sale at that point. At the same time, the buyer should record an increase in inventory as the buyer takes on both risks and rewards for owning the goods. The supplier is not liable for any damages during delivery and does not bear any delivery cost.