China Sourcing Blog

Navigating the complex labyrinth of international shipping requires a common language, a set of rules that clearly delineates the responsibilities, costs, and risks for both buyers and sellers. This is where Incoterms®—International Commercial Terms—come into play. Established by the International Chamber of Commerce (ICC), these three-letter codes are the cornerstone of global trade contracts. Among these terms, one stands out for placing the maximum obligation on the seller: DDP, or Delivered Duty Paid. For an importer, it can seem like the ultimate convenience. For an exporter, it represents a significant undertaking fraught with potential pitfalls. Understanding DDP is crucial for any business looking streamline their supply chain for their customers or, conversely, to avoid taking on unforeseen liabilities. This in-depth guide will dissect the DDP agreement, exploring its meaning, the intricate division of responsibilities, its pros and cons, ideal use cases, and answers to the most frequently asked questions. 1. What does

1. What does EX Works (EXW) Mean in shipping terms? EX Works (EXW) is an Incoterm® rule, meaning a standardized international trade term published by the International Chamber of Commerce (ICC). It signifies that the seller makes the goods available at their premises (e.g., factory, warehouse, or place of business). The buyer is responsible for all costs and risks involved in collecting the goods from that location and transporting them to the final destination. Essentially, the seller’s responsibility ends at their own dock. 2. What are the Buyers and Sellers Responsibilities with EXW Agreements? Seller:  – Make the goods available at the named place (their premises) at the agreed-upon time. – Package and label the goods appropriately for pickup. – Provide necessary documentation (e.g., commercial invoice, packing list) to assist the buyer in exporting. – Not responsible for loading the goods onto the buyer’s vehicle, nor for clearing the goods

1. What does FCA Mean in shipping terms? FCA stands for “Free Carrier” in shipping terms.It is one of the 11 Incoterms 2020 rules set by the International Chamber of Commerce (ICC).The core idea of FCA: The seller delivers the goods to the carrier nominated by the buyer.The seller must complete export customs clearance before delivery.Once the goods are handed over to the nominated carrier, the risk of loss or damage to the goods transfers from the seller to the buyer.FCA applies to all modes of transport, including multi-modal transport (e.g., road + sea, air + rail). 2. What are the Buyers and Sellers Responsibilities with FCA Agreements? Seller’s Responsibilities Buyer’s Responsibilities 3. Advantages and Disadvantages for the Buyer Advantages Disadvantages 4. When to Use an FCA Agreement? 5. FCA Agreements for China Importing: are they a good idea? Why FCA can be a good idea for China importing Potential