You’ve placed an order with your manufacturer, but who is responsible for picking up the goods? Shipping terms, aka incoterms, determine who arranges and pays for freight and Customs fees. There is no standard or governing body that regulates shipping terms, so its important you clarify who is responsibility for fees with your supplier. Here are the most common:
- Ex-works/Ex-factory (EXW) – You are responsible for picking up the freight from the factory and all ensuing fees.
- Free on Board (FOB Port of Origin) – This is the most common shipping term. The manufacturer is responsible for all origin fees up to the port. You are responsible for freight from the port, Customs clearance and door delivery. Cargocentric recommends FOB so you can 1) avoid any origin fees and exams, 2) have transparency of all fees and 3) have the most flexibility with choosing a freight forwarder.
- Cost, Insurance and Freight (CIF) – The supplier arranges freight to a destination port. You are responsible for all destination charges, including freight handling fees, US Customs clearance and door delivery. We highly do not recommend this shipping term because “freight handling fees” often involve erroneous inflated service fees.
- Delivered Duty Unpaid (DDU) – The supplier arranges freight to-door, but you are responsible for all destination Customs related fees, including duty and taxes.
- Delivered Duty Paid (DDP) – The supplier is responsible for all fees from door-to-door, including freight and Customs duties and taxes.
Cargocentric is able to work with any type of shipping term. Sign up to get started.