What are Incoterms?
There are a set of 11 international recognized rules which define the responsibilities between the seller and the buyers.
Incoterms are grouped into two categories ie :
1. 7 INCO Terms that are applicable for any mode of transport
2. 4 INCO Terms that are applicable for Sea, Land or Inland Transport
How important are Incoterms when negotiating with overseas suppliers.
There are 2 fundamentally important points to remember as a new importer when negotiating with your international supplier/manufacturer.
1. The Incoterms you have negotiated with your suppliers will determine the cost of your goods.
2. Understanding and negotiate the correct Incoterms will eliminates any risk of problems during the shipment process, as both parties will have a full understand who is responsible for what.
Advice for New Importers
New Importers who are not confident with their Incoterms and feel that they are going to get a cheaper rate by allowing the supplier overseas to send the shipment on prepaid basis, be aware! Below are a number of disadvantages when allowing the shipper/supplier to handle and pay for the freight:
1. Depending on the country of import (usually this is common with China) the arrival charges into Australia are higher.
2. The overseas shipper/supplier not always has your interest at heart, and they might decide to choose the cheapest service and the longest transit
3. The overseas shipper/supplier is in control of all the shipping document, which may delay the cargo on arrival and might lead to additional storage charges.
If you need any help on your next shipment with Incoterms, please feel free to contact me by completing the contact Us form or email Cinzia Sangalli directly.