As a seller, you determine which Incoterm to use. If you are shipping products outside the EU, choose your Incoterms and include them on your commercial invoice along with your HS codes .
It’s also crucial to include them in your terms and conditions . You should inform your customers if they are responsible for certain things, such as customs fees, for example. Note that ordinary consumers won’t necessarily understand the meaning of every Incoterm. Therefore, you should clearly describe the Incoterm(s) you choose, explaining each condition so your customers understand what it means for them.
When choosing your Incoterms, keep in mind that not all carriers support all terms, so be sure to check this with the carrier you plan to use for your international shipments.
What are the functions of Incoterms?
Incoterms have several functions. To mobile database make things easier, let’s divide them into primary and secondary functions.
Main functions of Incoterms
- Cost allocation : who bears which costs?
- Distribution of rights : who user first, continuous optimization takes on which obligations and on which transport?
- Risk transfer : who covers what risk and when?
Secondary functions of Incoterms
- Goods documents : who obtains the documents concerning the goods?
- Customs : Who is responsible for customs clearance?
- Transport documents : who provides which transport documents?
- Shipping insurance : who insures the goods and for which process?
- Information : who informs the consumer data other, when and how?
- Inspection of goods : Who carries out the inspection of goods?
Packaging : Who determines the packaging method?
DPU (Delivered at Destination Unloaded)
The seller is responsible for the costs and risks of delivering the goods to an agreed destination where the goods can be unloaded for onward transportation. The seller arranges customs clearance and unloads the goods at the agreed location. The buyer arranges customs clearance and all associated duties.
DDP (Delivered Duty Paid)
The goods are delivered to the destination, ready for unloading, after the seller has completed export and import customs clearance and paid the duties and taxes associated with these operations.
