4 International Trade Terms Might Confuse You

Trade terms are an essential part of quoting in international trade. The use of trade terms in the quotation clarified the respective responsibilities, costs and risks that two parties should bear in the delivery of the goods. Also, it explained the price composition of the goods. This simplifies the procedures for negotiation and shortens the transaction time.

HK One Plus has many years of international trade experience. Below we briefly introduce four international trade terms commonly used in One Plus, namely EXW, FOB, CIF, DAP.

EX Works (EXW)

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“Ex Works (EXW)” means “factory delivery”, which means that the seller is responsible for delivering the prepared goods to the buyer at the seller’s place, that is, the workshop, factory, warehouse, etc. The buyer bears all costs and risks of moving the goods from the seller’s location to the intended destination.

Since the product price for this term is the ex-factory price, the price is the lowest compared to other terms.

Free on Board or Freight on Board (FOB)

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Using this term, the seller shall be responsible for export clearance procedures, and deliver the goods to the ship designated by the buyer within the contracted port of shipment and within the specified time. Cost and risk are divided when the goods are actually on board of the vessel.

The buyer will take all risks after the goods are actually on board. This term applies to sea or inland water transportation.

Cost, Insurance & Freight (CIF)

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The components of the CIF price include the usual freight and agreed insurance premiums from the port of shipment to the agreed destination port. Therefore, the seller not only paying the costs required to ship the goods to the designated destination port but also the insurance premiums.

Although the seller arranges the transportation of the goods and manages cargo insurance, the seller is not responsible for guaranteeing the delivery of the goods to the agreed destination port. The buyer must bear all risks of loss of or damage to the goods after loading at the port of shipment. This term applies to sea or inland water transportation.

Delivered At Place (DAP)

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DAP (delivered at place) similarly replaces the terms DAF, DES, and DDU. The seller delivers the goods at the specified destination, and only needs to be prepared for unloading to complete the delivery but without unloading. Arrival vehicles in this term include ships, and destinations include ports. The seller shall bear all risks and costs (except for import costs) of transporting the goods to the designated destination. This term applies to any mode of transport, multimodal transport, and shipping.

Comparison of Four Incoterms

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One Plus Management Limited, as one of the leading POSM manufacturers in China and globally, has more than 25 years of experience in the POSM industry. Product types include shelf of supermarket/ convenience store, Counter, Premium, Paper print, Backwall, etc.

We always keep “creating value for clients” philosophy and strive to deliver comprehensive retail solutions including consulting, design, prototyping production, manufacturing, logistic, warehousing, installation and after-sales maintenance service to each client.

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HK One Plus has more than 10 years of international trade experience and has cooperated with more than 50 countries. We are proficient in using the above Incoterms to provide reliable services to our customers.

If you are looking for a partner for custom POSM, please feel free to email us at global@risingcn.com and we will do our best to meet your needs.

Written by
Umar Saeed
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