Shippers, importers, and exporters get a lot of wide-varying quotes from Freight Forwarders. It’s important to compare “apples with apples”.  Some quotes will include everything, while many forwarders leave out critical components to keep the initial cost down in order to win your business.  Be sure to specify your terms of sale, or international commercial terms i.e. “Incoterms” for an accurate, no surprise quote.

When global companies enter into contracts to buy and sell goods they are free to negotiate specific terms. These terms include the price, quantity, and characteristics of the goods. Every international contract should also contain what is referred to as an Incoterm, or international commercial term.  Applying Incoterms to sale and purchase contracts makes global trade easier and helps partners in different countries understand one another.

There are 11 standard terms that denote the points to which the shipper, carrier, and consignee hold risk and responsibility from start and end. The International Chamber of Commerce (ICC) in Paris oversees and administers Incoterms, and they are adhered to by the major trading nations of the world. The ICC first published this set of international rules in 1936 as “INCOTERMS 1936”. Incoterms are amended every 10 years and the most recent issue is “Incoterms 2010”.

The parties to the transaction select the Incoterms which determine who pays the cost of each transportation segment, who is responsible for loading and unloading of goods, and who bears the risk of loss at any given point during an international shipment.
Incoterms assist traders in interpreting the most commonly used international trade terms. Using correct Incoterms in an international transaction reduces uncertainties arising from the different interpretation of such terms in different countries. They apportion international trade transaction costs and responsibilities between buyers (importers) and sellers (exporters) and reflect modern-day transportation practices. Incoterms assist in significantly reducing misunderstandings among traders and thereby minimizing trade disputes and litigation.

In preparing quotations, Freight Forwarders should take into account ALL components of a shipment or transaction, and disclose them, along with their associated costs.  Failure to do so will produce unexpected costs and ill will with their customers.

Worldwide Cargo offers a high level of expertise relative to Incoterms and terms of sale.  We strive to provide our customers with as much information as possible upfront detailing what charges are included and those that are excluded.  Most charges are known before the shipment begins however; there are certain circumstances where charges are not always known until the shipment is in transport.  For example, the most common charge that may increase during transit is actual weight.  If the transport carrier finds the actual weight is more that what was originally recorded, they will add additional fees.

If you need guidance regarding Incoterms or a quote request, you are welcome to contact us and we will be happy to assist you.  More information may be found on the ICC website.

The following tables provide the most current Incoterms:

 

 

 

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