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® Ex Works (EXW) rule, the buyer has maximum obligations and the seller has minimum obligations.
EXW means that a seller has the goods ready for collection at its location (factory, warehouse) named after the 3 letters, at the agreed time. The buyer is then responsible for loading, transportation, customs clearance and clearance of the goods. This Incoterms® rule is not recommended when the seller handles loading and in international transactions where the 0 percent VAT rate is applied.
EXW is suitable for all forms of transportation.
Characteristics:
Delivery: the seller must make the goods properly packed available to the buyer at the agreed place of delivery and at the agreed time.
Transportation risk: the risk of damage to or loss of the goods in transit shall be borne by the buyer as of delivery.
Transportation costs: the costs are borne by the buyer from delivery.
Customs formalities: the buyer must take care of all customs formalities for the purpose of both export and import. For his account are also all costs, duties and taxes arising therefrom. Note that this is problematic when exporting outside the European Union.
Transportation insurance: neither party is required to obtain insurance for the goods.
Specification place of delivery: the condition of delivery must always include where the transfer of the goods takes place. With EXW this is indicated by: ... agreed place (... named place).
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