Whatever your sector of activity, it is essential for you to master the terms governing international trade abbreviated “incoterms”. Indeed, incoterms come from the English international commercial terms. These are logistics codes that define the responsibilities and logistical obligations of suppliers and customers. The Astuces 03 by 2GL has supported you on the watch or the audit of a supplier (more details here). You are now reassured about the reliability of each of your suppliers. However, in the list of incoterms 2010, we will focus on those that are the most used in China.
1- EXW or Ex Work (factory price):
The customer is in charge of the transport and bears the risks until final destination, the customer also pays the formalities and as well as the duties and taxes. The seller handles the packaging of products.
2- FOB (Free On Board):
The products are delivered in the boat chosen by the customer. The transfer of risks and costs is established once the products in the boat. The supplier then pays the transport costs to the port of shipment; he also pays the loading fees and is responsible for customs formalities and taxes. For example, the price of the FOB may vary by province in China, if you contact a supplier in Zhejiang province, he must transfer your products to the port of this province in the case of Ningbo, you will pay the price EXW + charges local export before boarding.
3- CFR (Cost and Freight):
In this case, the supplier pays the transport costs to the destination port as well as the loading costs. He assumes export formalities, duties and taxes. The customer bears the costs from the arrival of the products to the destination port. CFR price = FOB + Freight price.
4- CIF (Cost Insurance and Freight):
The terms of commercial term are similar to that of the CFR, with the difference that the supplier also assumes the insurance costs up to the port of destination. CIF Prize = FOB + Freight + Insurance Award.
To name a few, incoterms are standards that we urge you to use to prevent any problem. With the economic, commercial, and technological changes of the 2000 Incoterms, it is best to use the most recent of 2010.
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