What Are Shipping Terms?

Terms defined by the International Chamber of Commerce to regulate freight shipments between countries. They are also called INCOTERMS, which stands for “INTERNATIONAL COMMERCIAL TERMS”.

The Importance of Shipping Terms

These terms define the responsibilities of the seller and buyer with regard to sending and receiving goods in accordance with commercial contracts. These terms represent an effective method of communication between the parties and aim to regulate the relationship between them, so that the seller and the buyer understand the tasks, costs, risks, responsibilities and obligations as well as logistical matters related to the shipping process.

Also read: A Comprehensive Illustration of Shipping Containers

Important Responsibilities and Obligations Determined by Shipping Terms

Delivery Point

Shipping terms determine where the buyer will receive what he has ordered.

Transportation Fees

Shipping terms determine who will pay for the freight.

Also read: The Meaning of CFR in Shipping

Import & Export Procedures

Shipping terms determines who will arrange these procedures.

Cost of Insurance

Shipping terms determines which international company will deal with the insurance cost.

Also read: Meaning of C&F in Shipping

Things to Consider When Shipping

  • When goods reach their destination, the importing country asks for the payment of all import taxes imposed by it, including VAT. Many companies require the buyer to pay these taxes.
  • Usually the buyer wants to know the final cost which includes the shipping costs, fees and taxes. These taxes differ from one country to another according to commercial laws.