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What to Know When Shipping
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EXW (Ex Works): Seller makes the goods available at their own premises (origin), and the buyer is responsible for all costs and risks from that point onwards.
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FCA (Free Carrier): Seller clears the goods for export and hands them over to the carrier chosen by the buyer at a named place (origin). Buyer is responsible for all costs and risks from that point onwards.
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FOB (Free On Board): Seller loads the goods onto the buyer's chosen vessel at the named port of loading (origin). Risk transfers to the buyer once the goods are on board the vessel. Buyer is responsible for all costs from that point onwards.
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CFR (Cost and Freight): Seller pays for the costs and freight to transport the goods to the named port of destination. Risk transfers to the buyer once the goods are on board the vessel at the origin port. Buyer is responsible for unloading costs, customs clearance, and onward transportation.
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CIF (Cost, Insurance and Freight): Similar to CFR, but the seller also pays for insurance against loss or damage during transportation to the named port of destination. Risk transfers to the buyer once the goods are on board the vessel at the origin port. Buyer is responsible for unloading costs, customs clearance, and onward transportation.
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CPT (Carriage Paid To): Seller pays for the transportation costs to the named place of destination (can be a port, terminal, etc.). Risk transfers to the buyer upon delivery to the named place. Buyer is responsible for unloading costs, customs clearance, and onward transportation.
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CIP (Carriage and Insurance Paid To): Similar to CPT, but the seller also pays for insurance against loss or damage during transportation to the named place of destination. Risk transfers to the buyer upon delivery to the named place. Buyer is responsible for unloading costs, customs clearance, and onward transportation.
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DAP (Delivered At Place): Seller delivers the goods to the named place of destination (can be a port, terminal, etc.), unloaded from the arriving means of transport. Buyer is responsible for import duties and taxes and any onward transportation.
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DPU (Delivered at Place Unloaded): Similar to DAP, but the seller also unloads the goods at the named place of destination. Buyer is responsible for import duties and taxes and any onward transportation.
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DDP (Delivered Duty Paid): Seller delivers the goods to the named place of destination (can be the buyer's premises), having cleared them for import. This is the most comprehensive Incoterm, with the seller assuming maximum responsibility. Buyer is only responsible for any additional customs formalities after the goods are delivered.
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Commercial Invoice: A detailed document outlining the products, their value, and other relevant commercial information.
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Packing List: An itemized list describing the contents of the shipment, including quantities, weights, and descriptions.
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Bill of Lading (Ocean Freight) or Air Waybill (Air Freight): Acts as a receipt for your goods and serves as a contract of carriage between you and the carrier.
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Certificate of Origin: A document verifying the country where the goods were produced.
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Export Declaration/Customs Entry: This is the official document required by customs authorities in both the exporting and importing countries. It details the shipment information and serves as a legal record for statistical purposes.
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Inspection Certificates: Some goods, like food products or machinery, may require inspection certificates issued by relevant government agencies to ensure they meet safety and quality standards.
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Fumigation/Phytosanitary Certificates: For shipments containing organic materials like wood packaging or plant products, fumigation certificates or phytosanitary certificates might be necessary. These verify the goods have been treated to eliminate pests or diseases.
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Letter of Credit: This can be a payment method used in international transactions where a bank guarantees payment to the seller upon fulfillment of certain conditions.
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Payment Terms: Clearly define the payment terms like Incoterms (e.g., CIF - Cost, Insurance, and Freight, where the seller covers these costs).
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Trade Agreements: Existing trade agreements between countries can impact import duties and taxes. Researching these agreements can help you optimize your costs.
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Delivery Terms: Specify the delivery terms like door-to-door or Ex-Works (where the seller's responsibility ends at their warehouse).
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Weight and Dimensions: Knowing the accurate weight and dimensions (length, width, height) of your shipment is crucial for several reasons. It helps determine freight costs, select the appropriate freight type (e.g., container shipping, airfreight), and ensure proper cargo handling. Carriers typically charge based on weight or volumetric weight (whichever is higher). Be sure to factor in packaging materials when calculating the total weight and dimensions.
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Freight Type: The mode of transportation for your shipment depends on various factors like urgency, cost, and cargo type. Here's a brief overview of common freight types:
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Ocean Freight: The most cost-effective option for large shipments, but also the slowest. Ideal for non-perishable goods where speed isn't a major concern.
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Air Freight: The fastest option, but also the most expensive. Suitable for time-sensitive goods or perishables.
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Courier Services: Offer door-to-door delivery for smaller packages, often at a premium cost.
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Land Freight (Trucking): Useful for regional deliveries or when origin and destination are within driving distance.
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