Incoterms 2020

1. What are Incoterms?

2. Types of Incoterms
3. Incoterms for Ocean Freight
4. Why are Incoterms Important?
5. Main Differences Specific to a Country
6. When to Challenge Advice
7. What Shipping Incoterms Don’t Cover
8. Define Named Place in the Sales Contract
9. How incoterms impact your shipping cost
10. How Letters of Credit Limit Choice of Incoterm
11. Individual Incoterms

What are Incoterms?

Freight Incoterms (International Commercial Terms) are the standard contract
terms used in sales contracts with importing/exporting to define responsibility
and liability for shipment of the goods. In plain English – how far along the
process will the supplier ensure that the goods are moved, and at what point
does the buyer take over the shipment process.

Types of Incoterms
FOB (Free On Board), EXW (Ex Works) and FCA (Free Carrier) are the most
familiar types of Incoterms but there’s much about these and the other options
to learn. Because they are legal terms, written from a legal perspective,
Incoterms can be confusing or easily misunderstood. And making the wrong
choice might turn your shipment into an expensive nightmare.

All Incoterms: EXW, FCA, FAS, FOB, CPT, CIP, CFR, CIF, DPU, DAP, DDP

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Incoterms for Ocean Freight
Most Incoterms apply to both air and sea freight with a few exceptions: FOB,
FAS, CFR, and CIF apply to sea freight only (special for bulk merchandise).

Incoterms that aren’t specific to ocean freight can be used for any mode of
transport. Incoterms commonly used for air, train and road shipments are:

EXW (Ex-works)

The buyer assumes responsibility at the seller’s warehouse and takes care of
everything including transportation and insurance.

CIP (Carriage and insurance)

Just like CIF, this term puts responsibility for insurance on the seller.

CPT (Carriage Paid To)

When using this Incoterm, the seller delivers the goods and covers all fees
involved in delivering the goods to the named destination. After delivery, the
buyer assumes responsibility.

DDP (Delivered Duty Paid)

This term puts most obligations on the seller. They carry all the costs and risks
of transport, insurance, and customs clearance. This is the only Incoterm that
lists the seller as the importer of record at destination. Does not cover
unloading at destination.

DAP-Delivered At Place

The seller covers the costs involved in main carriage but is not responsible for
customs clearance. Covers unloading at destination.

Why are Incoterms Important?

Buyers should consider Incoterms before the contract of sale is negotiated, or
risk being stung by the supplier on the deal, and/or having unnecessary
complications to the shipment.

The importance of Incoterms relates to standardizing international trade and

defining shipping procedures when multiple parties and stakeholders are
involved. These globally accepted terms ensure the timely payment of goods,
services, and duties, while protecting suppliers, carriers, and buyers.

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Incoterms Chart & List
Check out this downloadable quick reference of Incoterms and the breakdown
of who is responsible for what at various points in the international supply
chain.

Main Differences Specific to a Country

The above advice covers most countries in most circumstances. For instance,
customs procedures are much more relaxed at porous borders, like within the
EU. The three other exceptions likely to affect shipments are: the US is the only
country that requires a Customs Bond, importing into the UK requires a
Deferment Account, and exporting from India includes a withholding tax.

When to Challenge Advice

Some freight forwarders prefer only using a favored set of Incoterms because
they “seem to work.” Therefore don’t be surprised if some forwarders push back
on your selection of Incoterm, despite it being the most appropriate Incoterm
for your shipment.

What Shipping Incoterms Don’t Cover

Incoterms do not cover property rights, possible force majeure situations and
breach of contract. Include of these within the contract of sale. Similarly, all

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Incoterms except the C terms do not assign responsibility for arranging
insurance. Cargo insurance is, therefore, a separate cost for buyers.

Define Named Place in the Sales Contract

When the Incoterm is written in the sales contract, the named place should
immediately follow the three letter Incoterm abbreviation, e.g. “FCA Shenzen
Yantian CFS.” Be precise when defining the location, especially with larger cities
that may have several terminals, and with larger terminals that may have several
drop-off points. You can use this global port finder to find specific port codes.

How Letters of Credit Limit Choice of Incoterm

If the sale is being completed with a letter of credit or documentary credit, the
chain that releases funds begins with the seller providing several documents to
the bank, including the bill of lading/air waybill. Letters of credit are used where
there is limited trust between the seller and the buyer. That rules out EXW,
because the supplier will be paid before pickup. F terms require trust because if
the buyer cancels the international transit, the supplier won’t have a bill of
lading to present to the bank. D terms require trust because the seller is bearing
all of the transport costs. That leaves the four C terms as the best options to use
with a letter of credit.

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Ex Works (EXW) – Shipping Incoterm
& Meaning
What is EX Works?
For EXW (Ex Works) shipping, the buyer arranges the full shipment, from the
supplier’s warehouse to the cargo’s ultimate destination.

EXW Price
When shipping EXW, you’ll be responsible for the added cost of getting your
goods from your supplier to the seaport or airport. Simply choose container,
box, or pallet shipping, enter your dimensions and weight, and you’ll get an
instant estimate of freight shipping costs.

EXW Loaded
It´s responsible for the load in the means of transport, the risks of the load are
on the part of the seller

Where Is the ‘Named Place’ For Handing Over Responsibility

From The Seller To The Buyer?
The buyer is liable and responsible for almost every step. The seller is only
responsible for the Bill of Lading or Air Waybill, and ensuring that the goods are
available for pickup at the named place, usually their factory, at a time agreed
with the forwarder.

What Does The ICC Say?

Recommended for containerized freight or multimodal transport

Is This A Good Choice?

This is probably not a convenient arrangement, as the buyer is usually in a much
poorer position than the seller for arranging tasks in the export country. Those
tasks include loading the truck; arranging for specialized equipment for loading
if required; documentation (the seller is only obliged to help get an export
license, Certificate of Origin etc. – and is not even obliged to provide packing
lists or fumigation certificates); and managing export clearance.
Consider FCA instead.

EXW Freight Tips And Tricks

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 If the seller is going to help load, make sure to include this elsewhere in the
sales contract.
 This shouldn’t be a problem if importing from China, but when selecting a
forwarder, check that they are able to arrange export customs clearance.
 The buyer isn’t actually obliged to arrange a contract of carriage. This means
that the buyer may sell the goods on to a customer, who will then arrange
collection.
 Exporters should hand over a courier receipt or FCR to the buyer’s forwarder,
rather than handing over the Air Waybill or Bill of Lading.
 Exporters won’t have direct evidence of export, should they otherwise be able
to claim a rebate from domestic sales tax.

Difference Between FCA & EXW

With the FCA Incoterm, the seller is liable and responsible for all tasks in their
country up until the goods are delivered to the carrier at the named place,
usually the terminal or a warehouse. Unless the named place is the terminal, the
buyer will be liable and responsible for some tasks in the export country. With
EXW, the importer is responsible for arranging local transport and customs.

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 FCA Incoterms 2020

What Is FCA In Shipping Terms

For FCA (Free Carrier) shipping, the seller arranges most or all of the export
country stages (e.g. customs, trucking within the export country). The buyer
arranges all other stages to the cargo’s ultimate destination.

Where Is The Named Place For Handing Over Responsibility From

The Seller To The Buyer?
The seller is liable and responsible for all tasks in their country up until the
goods are delivered to the carrier at the named place, usually the terminal or a
warehouse (e.g. consolidation centre). Unless the named place is the terminal,
the buyer will be liable and responsible for some tasks in the export country.

What Does The ICC Say?

Recommended for containerized freight or multimodal transport.

Is This A Good Choice?

FCA overcomes the disadvantages of EXW, where the buyer is in a worse
position than the seller for arranging local transport and customs.

FCA Tips And Tricks

 If the named place is a forwarder’s warehouse or some other terminal that is

not the seaport or airport, the seller remains liable and responsible for loading
the truck at their premises, with the carrier responsible for unloading the truck
at the named place. The buyer is therefore liable and responsible for some
tasks in the export country (transportation and terminal charges).
 The named place can also be the supplier’s factory, making it similar to EXW,
excepting the supplier is responsible for loading the truck. The buyer is
therefore liable and responsible for some tasks in the export country
(transportation and terminal charges).
 Irrespective of where the named place is, the seller is still responsible for all
export and documentation tasks. There’s one exception, which is relevant only
for letter of credit payments: the buyer can now instruct the carrier to add the
word “aboard” onto the Bill of Lading.

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What is Free Alongside Ship (FAS)
Shipping Incoterm?

FAS In Plain English

For FAS (Free Alongside Ship) shipping, the seller arranges all export country stages. The buyer arranges all other stages
to the cargo’s ultimate destination.

Where Is The Named Place For Handing Over Responsibility From

The Seller To The Buyer?
The seller is liable and responsible for all the steps in their country, up until the goods are alongside the ship, or the
terminal warehouse in the case of air freight. The buyer is responsible for loading.

What Does The ICC Say?

Not recommended for containerized freight. Designed for bulk and break bulk
cargo.

Is This A Good Choice?

There is no obvious reason why the buyer should only want to be liable and
responsible for one task in the export country – loading containerized freight.
Consider FOB instead, which is exactly the same as FAS, but has the additional
benefit of the seller being liable and responsible for loading the ship.

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 Free On Board (FOB) Shipping:
Incoterms 2020

International trade is complicated.

And while no two countries have exactly the same laws, when it comes to freight there are many precepts that are
standardized worldwide.

This means that no matter where you ship from, you will encounter the same regulations. One of the most prominent
examples of this standardization is the International Commercial Term, or Incoterm.

Simply put, an incoterm is the standard contract used to define responsibility and liability for the shipment of goods. It
plainly lays out how far along into the process the supplier will ensure that your goods are moved and at what point the
buyer takes over the shipment process. It also has implications for your total freight costs.

FOB Incoterms & More

Free On Board (FOB)
Of the 11 different Incoterms that are currently used in international freight,
Free on Board (FOB) is the one that you will encounter most frequently.

1. FOB Shipping Meaning

2. FOB Shipping and Pricing
3. What is the Difference Between FOB Shipping Point and FOB
Destination?
4. FOB Shipping Point
5. FOB Pricing: What is the Difference Between FOB and other
ocean shipping Incoterms?
6. What is the Difference Between FOB and FAS?
7. What is the Difference Between FOB and CFR?
8. What is the Difference Between FOB and CIF?

FOB Shipping Meaning

First, let’s define what FOB (free on board) means by breaking it down word-by-
word.

The term ‘free’ refers to the supplier’s obligation to deliver goods to a specific
location, later to be transferred to a carrier.

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 In other words, the supplier is “free” of responsibility. ‘On board’ simply means
that the goods are on the ship.

As such, FOB shipping means that the supplier retains ownership and
responsibility for the goods until they are loaded ‘on board’ a shipping vessel.
Once on the ship, all liability transfers to the buyer.

Expert's Note
The FOB Incoterm is only applied to shipments being sent by sea or waterway.

The further clarify, let’s track the FOB shipping process:

1. You purchase goods from a supplier in China and agree to FOB shipping terms. The next
three steps of the process are carried out at the supplier’s expense.
2. Your goods are packaged and loaded onto a truck (or another form of transportation) at the
supplier’s warehouse (or another facility).
3. The truck brings the goods to the port.
4. The goods are loaded on board the shipping vessel.
5. Once aboard, the rest of the journey from China is now both your liability and your expense.
Anything that happens from this point is on you.

The concept is illustrated below:

There are situations where you may be responsible for covering costs before
your goods are on board.

When you are shipping loose cargo (ie, not a full container), for example, your
goods must go through a Container Freight Station (CFS) to be consolidated
into a container.

Some suppliers do not cover the cost of consolidation.

With FOB shipping point, ownership of goods is transferred to the buyer once
they leave the supplier’s shipping point.

From there, the title for the goods transfers from the supplier to the buyer
immediately and if anything happens to the goods at any leg of the journey to
the buyer from there, the buyer assumes all responsibility.

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With FOB destination, ownership of goods is transferred to the buyer at the
buyer’s loading dock.

Upon delivery of the goods to the destination, the title for the goods transfers
from the supplier to the buyer.

If anything happens to the goods on any leg of the journey to the buyer, the
supplier assumes all responsibility.

FOB Shipping Point

When the terms are FOB shipping point, the supplier relinquishes all of his
responsibility for the goods at his shipping point and the buyer is obligated to
cover the freight costs required for getting them to the desired location.

To further clarify, let’s assume that Claire’s Comb Company in the US purchases
a container of The Wonder Comb from a supplier based in China.

An FOB shipping point agreement is signed and the container is handed off to
the freight carrier at the shipping point.

If sending the container to the US costs $1000, Claire’s Comb Company is

responsible for paying that sum in full in order to get the goods.

FOB Price: What is the Difference Between FOB

and other sea shipping Incoterms?
There are four Incoterms that are applied exclusively to ocean
shipments: FOB, FAS, CFR, and CIF.

Understanding the differences between each is as simple as knowing how much

responsibility the buyer and supplier assume under each agreement.

What is the Difference Between FOB and FAS?

Free Alongside Ship (FAS) is a barebones ocean freight shipping option. It
requires the supplier to pay for the delivery of your goods up until the named
port of shipment, but not for getting the goods aboard the ship.

The buyer takes responsibility for the shipment once it is placed alongside the
shipping vessel.

Unlike FOB shipping, the supplier is not required to ensure the safe movement
from port to ship.

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What is the Difference Between FOB and CFR?
Cost and Freight (CFR) puts the costs associated with transporting your goods
to the destination port on the supplier.

This includes any fees associated with export, in addition to the cost of sending
your freight to the port of destination.

Once the delivery is unloaded in the receiving country, responsibility is

transferred to you.

CFR includes neither insurance nor the costs associated with getting the delivery
to your final destination. Also excluded are customs duties.

What is the Difference Between FOB and CIF?

Cost, Insurance, Freight (CIF) puts the liability of payment for – you guessed it
– cost, insurance, and freight on the supplier.

This means that your shipment is in the proverbial hands of the supplier
through the process of transporting them to a port and loading them aboard a
ship. They also cover insurance costs.

The buyer still pays additional fees like customs clearance, however.

Depending on the agreement with your supplier, your goods may be considered
delivered at any point between the port of destination and your final delivery
address.

CIF is a more expensive contract option than FOB, as it demands more effort
and expense on the part of the supplier.

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 What is Carriage Paid To (CPT)
Shipping Incoterm?
1. CPT In Plain English
2. Where Is The Named Place For Handing Over Responsibility
From The Seller To The Buyer?
3. What Does The ICC Say?
4. Is This A Good Choice?
5. CPT Tips And Tricks

CPT In Plain English

CPT (Carriage Paid To) is a tricky Incoterm. Read the details carefully. Only recommended if using a Letter of Credit.

Where Is The Named Place For Handing Over

Responsibility From The Seller To The Buyer?
The seller is responsible and liable for all the steps in their country, or as far as the buyer’s forwarder’s warehouse. The
seller is also responsible for booking main carriage to a terminal in the buyer’s country, or even further to the buyer’s
warehouse. Either way, the seller is not liable after the goods arrive at the terminal or warehouse in their own country.

What Does The ICC Say?

Recommended for containerized freight.

Is This A Good Choice?

Importers who don’t have a representative at the port should be wary of using
this term unless they are sure that the carrier’s rates include terminal handling
charges. If not, your seller’s forwarder will use a 3rd party agent to manage
import clearance, duties, and terminal charges. Many importers get caught with
inflated charges and dubious fees that they are effectively unable to challenge.

CPT Tips And Tricks

 By contrast, this Incoterm is often an excellent choice for larger importers, if they have an agent responsible for goods
(clearing and delivery) once they reach the terminal at the import country.
 If there is more than one carriage in the export country, e.g. via a forwarder’s warehouse for consolidation, the seller
is not liable or responsible for the middle man (second carriage), unless that is made clear in the sales contract.
 Risk (liability) and responsibility (for tasks and payment) are handed over at different points for C terms. Risk is
transferred in the export country when the carrier receives the shipment (at the named place of delivery), even
though the buyer has booked and paid for the main carriage.
 When the Incoterm is mentioned in a contract of sale, the named place immediately follows, e.g. EXW (address of
seller’s factory). For those Incoterms where risk and responsibility are split, use the named place of destination
(responsibility). Be sure to specify the named place of delivery (liability) elsewhere in the sales contract.

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 The buyer should arrange insurance cover from where liability is transferred (the named place of delivery), i.e. the
terminal in the export country.
One of the four C terms should be selected when the sales contract includes a letter of credit.

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 CIP (Carriage and Insurance Paid To)
Shipping Incoterm

What Does CIP Mean in Shipping?

CIP (Carriage And Insurance Paid To) means that the seller is responsible for delivery, delivery costs, and insurance costs
of the goods until they are transferred to the first carrier tasked with transporting the goods. Once this delivery takes
place, the buyer takes on all responsibility.

If you’re considering shipping using CIP, make sure to read the details of your contract carefully.

This Incoterm is recommended only if you’re using a Letter of Credit.

CIP vs CIF
What’s the difference between CIP and CIF?

The two Incoterms are very similar, except that CIP is used for all modes of
transport, whereas CIF applies to sea freight only. This also means that for CIF,
responsibility transfers at the origin seaport, whereas for CIP it transfers at any
agreed-upon location in the origin country.

CIP is also very similar to CPT, except that with CIP, the seller is also responsible
for arranging main carriage insurance.

CIP Shipping Tips And Tricks

 Our CPT tips are also helpful for CIP, except for the tip on the buyer arranging insurance – because in CIP, that’s the
seller’s job.
 The seller is required only to arrange minimum insurance cover, to the invoice value of the goods. If the buyer does
not consider that coverage sufficient, an agreed level of cover can be included elsewhere in the contract of sale.
 Although the seller is responsible for insurance, the risk transfers to the buyer before the main carriage.
 The seller is not obliged to arrange insurance for pre-carriage in the export country or carriage in the import country
unless this is specified elsewhere in the sales contract.

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What is Cost and Freight (CFR)
Shipping Incoterm?

CFR (Cost And Freight)

Where Is The Named Place For Handing Over Responsibility From

The Seller To The Buyer?
The seller is liable and responsible for all the steps in their country up to the point the goods are loaded on board the
vessel and is also responsible – but not liable – for the main carriage.

What Does The ICC Say?

Not recommended for containerized freight. Designed for bulk and break bulk
cargo.

Is This A Good Choice?

As for FOB, this Incoterm is suitable for FCL, but not for LCL and Air Freight
(refer FOB).

Also, importers who don’t have a representative at the port should be wary
using this term, unless they are sure that the carrier’s rates include terminal
handling charges. If not, your seller’s forwarder will use a 3rd party agent to
manage import clearance, duties, and terminal charges. Many importers get
caught with inflated charges and dubious fees that they are effectively unable to
challenge.

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 What is Cost, Insurance and Freight
(CIF) Shipping Incoterm?

CIF (Cost, Insurance, And Freight)

Where Is The Named Place For Handing Over Responsibility From

The Seller To The Buyer?
This Incoterm works exactly like CPT, excepting the seller is also responsible for arranging main carriage insurance.

What Does The ICC Say?

Not recommended for containerized freight. Designed for bulk and break bulk cargo.

CFR Tips And Tricks

 Refer to CPT, obviously excepting the tip on the buyer arranging insurance.
 The seller need only arrange minimum insurance cover, to the invoice value of the goods. If the buyer considers that
this level of cover is not sufficient, an agreed level of cover can be included elsewhere in the contract of sale.
 Although the seller is responsible for insurance, the risk transfers to the buyer before the main carriage.
 The seller is not obliged to arrange insurance for pre-carriage in the export country or carriage in the import
country unless this is specified elsewhere in the sales contract.

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 What is Delivered At Place Unloaded
(DPU) Shipping Incoterm?

1. DPU In Plain English

2. Where Is The Named Place For Handing Over Responsibility
From The Seller To The Buyer?
3. What Does The ICC Say?
4. Is This A Good Choice?
5. DPU Tips And Tricks

DPU In Plain English

For DPU (Delivered at Place Unloaded) shipping, the seller arranges all export country charges and international transit.
The buyer arranges the rest.

This Incoterm can lead to problems as it involves two forwarders at a critical point.

Where Is The Named Place For Handing Over

Responsibility From The Seller To The Buyer?
The seller continues responsibility and risk into the import country, up until the shipment is unloaded. This can occur at a
number of locations, including the port, inland terminal, or forwarder’s warehouse.

What Does The ICC Say?

Recommended for containerized freight.

Is This A Good Choice?

This rule favors the seller where the seller is stronger, being liable and
responsible for all tasks in the export country; and favors the buyer where the
buyer is stronger, being liable and responsible for all tasks in the import
country. The seller is also liable and responsible for the main freight. Also
consider DAP with a terminal as the named place, where the buyer pays for
unloading.

DPU Tips And Tricks

 The seller pays for unloading. The buyer is responsible for all charges after unloading, except (in theory) any charges
caused by delay, including demurrage charges at the terminal, which is generally the seller’s responsibility.
 That exception can get contentious. The seller has good grounds to refuse to pay if the buyer held up import customs
clearance. But, maybe that was because the seller submitted incorrectly in the first place. Maybe that was the Customs
broker’s error. Consider ways to avoid this type of dispute when negotiating the contract, stage, e.g. the seller
couriers some documents to the buyer before pickup; liability for demurrage and other costs takes into account the

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 above scenario, all information on documents to be submitted to Customs must be double-checked. Basically, the
buyer, seller, and carrier need to work closely. Or instead, consider CPT (delivery to buyer’s warehouse).
 Ensure that the seller can undertake all the necessary formalities in the buyer’s country, e.g. paying GST or VAT.
 Damages are more likely to occur between the buyer’s premises and the import country terminal than the final leg to
the buyer’s warehouse. However, this can be difficult to prove. Consider DAP instead.
 If the named place is a clearance depot, or for more porous borders where Customs does pre-clearance at the border,
the shipment may be delivered to the named place uncleared. That is, payment to Customs is still required.

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 Delivered At Place (DAP) Shipping
Incoterm (2021)
1. What is DAP Shipping
2. DAP Freight Tips And Tricks
3. DAP Costs & Prices
4. DAP vs DDP Incoterms

What Is DAP In Shipping?

For DAP (Delivered At Place) shipping, the seller arranges the entire shipment, except import customs.

Where Is The Named Place For Handing Over Responsibility From

The Seller To The Buyer?
The seller continues responsibility and risk into the import country, usually to the buyer’s preferred warehouse (their
own, FBA warehouse, the forwarder’s warehouse, etc). However, as for FCA, the named place may be also be the
terminal.

What Does The ICC Say?

Recommended for containerized freight.

Is This A Good Choice?

This is probably not a convenient arrangement, as the seller is usually in a much
poorer position than the buyer for arranging tasks in the import country.

DAP Freight Tips And Tricks

 All tips and tricks for DAT also apply for DAP, excepting the first – responsible for unloading.
 For DAT the seller is responsible for unloading. For DAP the buyer is responsible for unloading.
 If the terminal is selected as the named place, DAP is exactly the same as DAT, excepting the seller pays for
unloading.

DAP Cost and Prices

When shipping under the DAP Incoterm, sellers are responsible for all costs with
the delivery of goods to the final destination. This applies to sea and air freight,
and ground transport.

Some additional charges that need to be considered are freight insurance,

customs, duties, and taxes, and any costs associated with unloading cargo at the
final destination.

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DAP replaced DAF, DES, and DDU Incoterms.

DAP vs DDP Incoterms

Incoterms can get confusing, especially when the letter terms are so similar.
Take for example DAP and DDP. These Incoterms are easy to mix up but they
are distinct. With DDP, buyers are responsible for unloading and sellers are
responsible for everything else including packing, labeling, transport, customs,
duties, and taxes. When shipping under the DAP Incoterm, buyers are
responsible for unloading, as well as customs clearance, duties, and taxes.

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 DDP Shipping, Incoterms &
Calculator
1. DDP In Plain English
2. Where Is The Named Place For Handing Over Responsibility
From The Seller To The Buyer?
3. What Does The ICC Say?
4. Is This A Good Choice?
5. DDP Tips And Tricks

What is DDP Shipping?

For DDP (Delivered Duty Paid) shipping, the seller arranges the entire shipment,
including import customs.

DDP Incoterms Explained

Here are some important things importers need to know about shipping under
the DDP Incoterm.

Where Is The Named Place For Handing Over Responsibility From The
Seller To The Buyer?

The seller is liable and responsible for the entire shipment. The buyer is only
responsible for unloading the goods, including import clearance/payments. The
named place of delivery is usually the buyer’s choice of warehouse.

What Does The ICC Say?

Recommended for containerized freight.

Is This A Good Choice?

This is probably not a convenient arrangement, as the seller is usually in a much

poorer position than the buyer for arranging tasks in the import country. This
can lead to several problems (refer tips and tricks). Less experienced importers
should probably avoid this Incoterm, and consider DAP instead.

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 DDP Shipping Terms & Services
 Some countries, including the US, do not permit forwarders to complete customs clearance. Therefore, the supplier
must be registered as an importer, or else they will not be able to complete import clearance.
 Suppliers should also be experienced acting as an importer. Import clearance is complicated, and if the process is not
followed to the letter, the shipment is likely to be held up in Customs.
 Therefore, the seller should insist on a copy of the entry documentation from the clearance agent to be provided
soon after submission, to check for errors. In some countries, Customs accepts timely corrections.
 Domestics sales tax can only be paid by locally-registered businesses. If the seller isn’t registered, the buyer will
probably become liable for sales tax. There is a workaround by qualifying the rule, e.g. Delivered Duty Paid (Sales Tax
unpaid).
 DDP does not specifically require the seller to undertake import clearance. The buyer and seller may agree that the
buyer manages this task instead.
 If the buyer offers to clear the goods for the seller, they should insist on using their own clearance agent. Otherwise,
they risk losing control of the shipment’s whereabouts. They could end up being responsible for unnecessary costs,
especially demurrage and storage. This can be overcome by specifying elsewhere in the sales contract that the buyer
is not liable for any additional costs caused by clearance agent error, and is not liable for any costs beyond a short
period (2-3 days) after carrier release.
 A sales quotation from the supplier based on this Incoterm is effectively the landed cost and can be used to decide
whether to source domestically or import.

Fuente: https://www.freightos.com/freight-resources/incoterms-plain-english-freight-
shipping-guide/

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