Explore the importance of Incoterms in international trade and their impact on the European logistics market. Incoterms is an international standard on the rights and obligations of the buyer and seller in the international transportation of goods.
Incoterms, or International Commercial Terms, play a crucial role in defining the responsibilities and liabilities of buyers and sellers in global trade. In the European logistics market, understanding and correctly applying Incoterms is essential for seamless and cost-effective international transactions. These terms, including EXW, FOB, CIF and DAP, govern everything from the point of origin to the final destination of the goods. For example, EXW and FOB give buyers more control over the transportation process, while other terms imply that sellers take charge. Interestingly, CIF prices are often quoted initially, but there is flexibility to offer prices based on different terms. Neele-Vat, with its extensive experience in international logistics, recommends choosing EXW or FOB, allowing maximum control while using our expertise to manage transportation to your specified destination. We will elaborate on each Incoterm and offer valuable insights for navigating the European logistics landscape.
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Under the ICC Incoterms® rule Cost and Freight (CFR), the seller must arrange and pay for transportation up to the named/chosen port of destination. The risk passes to the buyer earlier, namely as soon as the goods are loaded on the ship. The distinction between the port of destination and the port of shipment is also important in CFR.
CFR is a maritime delivery condition and is primarily used in bulk and general cargo shipments. ICC does not recommend using this Incoterms® rule for container shipping.
Characteristics:
Delivery: the seller delivers the goods by loading them aboard the vessel named by the buyer at the agreed port of shipment.
Transportation risk: the risk of damage to or loss of the goods passes to the buyer as soon as the goods are loaded on board the vessel.
Transportation costs: the cost of transportation to the agreed port of destination shall be borne by the seller. Thus, the seller enters into a transportation agreement for transportation to the destination port. Thereafter, the costs are borne by the buyer. Please note that the transfer of costs does not take place at the same time as the transfer of risk for transport damage.
Customs formalities: the seller must take care of all customs formalities arising from the export. For his account are also the related costs, duties and taxes. At the buyer's expense and risk are all customs formalities and related costs, duties and taxes arising from importation into the country of destination.
Transportation insurance: neither party is required to obtain insurance for the goods.
Addition place of delivery: The condition of delivery must always add where the transfer of the goods takes place. In CFR this is indicated by: ... agreed port of destination (... named port of destination). Note: with the C-terms the delivery (and transfer of risk) already takes place at departure. Transport costs are for the seller to the agreed port of destination.
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