<blockquote id="">The International Chamber of Commerce has divided Incoterms&reg; under 11 heads. In this blog post you will get to know about the Incoterm&reg; Free on Board.</blockquote>
International Commercial Terms &ndash; commonly known as Incoterms&reg; - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1st January 2020. The ICC first published the Incoterms&reg; in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.
International trade involves transactions between territories that have different rules and regulations. Incoterms&reg; are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms&reg; to decide who bears the cost and when the risk gets transferred from seller to buyer.
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<h3 id="">Free on Board (Port): Overview</h3>
Free on Board (FOB) is an Incoterm&reg; that specifies that the seller is responsible for all costs involved with loading the cargo onto the ship. When the goods are secured on board the ship, the risk is transferred to the buyer, who is then in charge of the remaining portions of the shipment.
The buyer is responsible for processing after the delivery point. Based on what the two parties have decided, responsibility for risk and insurance is defined. Only transport by sea or interior waterways is covered by FOB. As a result, the location is always a port. If the principal conveyance is by air, ground, or rail, it does not apply.
Since the seller is in charge of the items up until they are loaded onto the vessel, he must make sure goods get there. FOB is typically only used in a few situations with containers at minor ports because most products are now delivered to container yards rather than directly to a single vessel. Both sides agree on the location of the products' delivery before shipment.
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<h3 id="">Free on Board: Seller&rsquo;s Responsibilities</h3>
The full list of the seller's obligations can be found below:
1) Warehouse: The seller's warehouse, as used in the FOB Incoterm&reg; , refers to the location where the seller keeps his or her products to complete the export process. In this case, the seller is responsible for paying for product maintenance. In the process, the warehouse is also referred to as the location of origin, where both parties decided to enter a contract.
2) Transportation: Inland transportation from the warehouse to the arrival port is part of the trade transit for the seller.
3) Documents: The following documentation must be provided by the seller to the buyer:
<ul id="">
<li id="">Commercial invoice</li>
<li id="">Bill of Lading</li>
<li id="">Packing list</li>
<li id="">Insurance certificate</li>
<li id="">Export licence</li>
<li id="">Custom clearance</li>
</ul>
4) &nbsp; In a FOB agreement, the seller is responsible for exporting goods from the point of origin to the port of delivery. Additionally, since the seller's obligation extends solely to the port, their focus is on the export customs. Seller will be responsible for handling all export customs processes and associated fees.
5) &nbsp; Freight:
<ul id="">
<li id="">Seller is responsible for expenses of storing the goods in the warehouse.</li>
<li id="">Payment to the freight forwarding agent.</li>
<li id="">Charges to be paid at the terminal</li>
<li id="">Fees associated with loading goods at the port</li>
<li id="">Freight payment from FOB origin, or the location agreed upon by the parties, till the port</li>
</ul>
Basically, all fees paid FOB from the point of origin until the goods are loaded at the port.
6) Insurance: Normally, the seller is not obligated to provide insurance to the buyer. However, it can be decided as a matter of concern for the seller up until the terminal as a matter of discipline. Moreover, at the buyer's request, the seller may offer to help the buyer with insurance and customs arrangements.
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<h3 id="">Free on Board: Buyer&rsquo;s Responsibilities</h3>
The buyer has the obligations listed below to complete the logistical process:
1) Warehouse: For a buyer, a warehouse is the location where the items will be kept following the entire import-export transaction. Since the buyer will transport the products from the port in his country to the warehouse, it is his job to unload the cargo there.
2) Transportation: The buyer is responsible for all transportation costs after the seller loads the goods at the port. The seller therefore handles the ocean freight transit, the unloading of products, and the inland transfer from the buyer's port to his location.
3) Documents: The buyer will need those documents in order to import goods into the port of his country because the seller will show verification of all export clearance procedures to the buyer.
4) Custom Clearance: Since the seller will have already handled the export processes, the buyer will be responsible for FOB import customs. Even then, the buyer will still need the seller to provide proof of export customs to complete the shipment process.
5) Freight: The buyer will be responsible for paying marine freight, transportation from the port of arrival to the final destination, the cost of goods insurance, as well as any charges associated with loading and unloading the products from the port of arrival to the final destination.
<h3 id="">Free on Board: Advantages for the Buyer</h3>
Since each party's responsibilities provide them the most control while the shipment is in their jurisdiction, FOB shipping is quite popular among buyers and sellers. When using FOB Incoterms&reg;, the buyer benefits from having the most control over logistics and shipping costs, which gives them the freedom to select the shipping options.
With FOB, the purchaser can choose the freight forwarder for the complete cargo, instead of depending on the supplier to handle some or all of the freighting. To reduce back and forth and the possibility of confusion between two shipping companies, the buyer only needs to rely on one company for the duration of the transportation process.
FOB Incoterm&reg; is also the most economical choice because it provides the buyer the freedom to compare shipping costs. The risk is transferred when the items are safely put onto the shipping vessel, however the buyer's forwarder is in charge of all aspects of the transportation process. Once the package has left the seller's warehouse, the buyer is in charge of the goods and has better control over the delivery's success.
Sellers value FOB Incoterms&reg; because they can consider the sale closed as soon as the consignment leaves their factory.
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<h3 id="">Free on Board: Disadvantages for the Buyer </h3>
For most buyers, FOB has minimal to no drawbacks. The process may appear more difficult for newer importers or importers who have always made purchases under Incoterms&reg;, where the seller arranges the freight expenses. However, the management and considerable cost reductions quickly surpass this drawback.
<h3 id="">When to Use FOB Incoterm&reg; </h3>
Most bulk goods that will be transported by sea qualify as valid FOB agreements. Assuming that the shipment can be sent by any method of transportation, as is frequently the case with buyers and sellers, FOB is misunderstood. Only exports by sea and inland waterways are feasible by FOB, according to the ICC. FCA is an Incoterm&reg; that can be used for all modes of transportation when shipping by land rather than sea, therefore buyers and sellers may want to use it.
Even if the buyer acquires ownership of the cargo once it is put onto a truck at the seller's warehouse, the seller is still in charge of making sure the consignment sails safely beyond the ship's rails.

Explore the benefits of incoterm free on board. Enhance your shipping process with efficient logistics solutions.

Incoterms® FOB: Free on Board Simplified

<blockquote>The International Chamber of Commerce has divided Incoterms® under 11 heads. In this blog post you will get to know about the Incoterm® Cost and Freight.</blockquote>International Commercial Terms – commonly known as Incoterms® - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1st January 2020. The ICC first published the Incoterms® in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.International trade involves transactions between territories that have different rules and regulations. Incoterms® are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms® to decide who bears the cost and when the risk gets transferred from seller to buyer. <a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CFR" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" alt="638f221ea0a3531379525477_Blog-Creative-1.png"></a><h3>Cost and Freight (Port): Overview</h3>Cost and Freight (CFR) means the seller has fulfilled its obligation when the goods are delivered and loaded on the vessel they’ve nominated at the named port of shipment.Only inland and sea transport should make use of CFR under Incoterms® 2020. As soon as the items are loaded onto the vessel before carriage begins, risk or liability for the goods passes from the seller to the buyer, and the buyer is then responsible for any further expenditures. <img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638dc975c52f545ff652f28c_Cost%20And%20Freight%20V2%5B73%5D.jpg" alt="638dc975c52f545ff652f28c_Cost%20And%20Freight%20V2%5B73%5D.jpg"><h3>Cost and Freight: Transportation Options</h3>Although buyers and less experienced exporters might choose an F-group term, more experienced exporters prefer C-group terms since they allow direct communication with the carrier and provide all the information required for letters of credit in one location. Additionally, if you book a lot of freight, selecting C-group terms gives you more negotiation power.Like the other four Incoterms® 2020 rules for shipping by sea and inland waterways, CFR is best used when the seller has direct access to the vessel for loading, such as when shipping bulk freight or non-containerized commodities. Carriage Paid to (CPT), however, might be a superior Incoterms® option for most exports. Any freight destination may be the named destination under CPT.The risk of the products is transferred to the buyer after they are carried onboard, or before to the freight continuing, under CFR shipping terms, even though the seller is responsible up till the designated point of port. All payments after the scheduled port, including goods insurance, are the buyer's responsibility. Additionally, in CFR, the seller is not bound by any mandatory obligations, in contrast to the CIF Incoterm®, which calls for the provision of insurance coverage. <a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CFR" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" alt="638f224556fe413902d3d886_Blog-Creative-2.png"></a><h3>Cost and Freight: Seller’s Responsibilities</h3>When transacting using CFR Incoterm®, the seller is accountable for the following:1) The seller shall make the following expenses: <ul><li>Warehouse charges</li><li>Inland charges for loading and carrying goods till the designated port</li><li>Depot and duty charges for terminal proceedings</li><li>Charges for documentation</li><li>Custom charges</li><li>Charges for shipping freight</li></ul>CFR freight charges are paid by the seller. He continues to be responsible for the carriage going from the warehouse to the first port, which is the port of the exporting country, and then for the carriage going from the first port to the second port, which is the port of the importing country.2) Insurance: In general, the seller is not required to have insurance. Although he is in charge of delivery, he is not in charge of insurance. However, he may extend his services to insurance or even carry out the coverage process at the risk and expense of the client3) Duty and customs clearance: The export customs procedures are the seller's responsibility. He is responsible for maintaining the packing list, commercial invoice, bill of lading, and other export-related paperwork. He will pay for things like terminal fees and freight forwarding costs. Additionally, he will give the buyer that paperwork to complete the freight procedures after the procedure.4) Risk transfer: The risk of the goods after the first port is not the seller's responsibility, even though he is responsible for delivery of the goods up to the designated port. As soon as the seller loads the goods onto the vessel, the buyer assumes the risk of the commodities. Therefore, the importer is responsible for paying any additional fees or levies placed on the products because of carelessness or delays, such as shipping demurrage fees, unexpected taxes, etc. <a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CFR" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png"></a><h3>Cost and Freight: Buyer’s Responsibilities</h3>Under the CFR Incoterm®, the buyer is accountable for the following:1) Cost: <ul><li>Costs associated with insurance since he bears the entire burden of covering and the risk involved with the goods.</li><li>Processes for import customs, including payment of all fees and taxes at the designated port.</li><li>Transportation costs for inland travel between the designated port and the final destination.</li></ul>2) Freight: In this process, the buyer is just barely involved. As soon as the seller delivers the goods, the buyer must unload them at the dock and load them for interior transit to the final destination.3) Risk Transfer: As soon as the seller loads the items onto the vessel at the first port, the risk of the commodities passes to the buyer. Additionally, the buyer bears the insurance risk from the beginning of the trade procedure. The loss will be the duty of the buyer if he neglects to direct the seller to the delivery port.4) Insurance: As soon as the seller loads the items onto the vessel at the first port, the risk of the commodities passes to the buyer. Additionally, the buyer bears the insurance risk from the beginning of the trade procedure. The loss will be the duty of the buyer if he neglects to direct the seller to the delivery port.5) Duty and customs clearance: The buyer is responsible for paying any import duties included in the CFR. The buyer is liable for unloading the items when the seller drops them off at the agreed port. All import taxes and charges are his responsibility at the dock port. Additionally, he will be responsible for paying any local and depot fees.Even while the seller is responsible for delivery of the products up to the designated port, he is not responsible for the risk of the items after the first port. The risk of the commodities shifts to the purchaser as soon as the seller loads them onto the ship.Therefore, any additional charges or levies imposed on the goods because of negligence or delays, such as shipping demurrage fees, additional taxes, etc., are the responsibility of the importer. <h3>When to Use Cost and Freight Incoterm® </h3>The best applications for CFR Incoterms® are in inland waterway and ocean freight. It is generally utilised for bulk cargo and non-containerized commodities when the seller has direct access to the vessel and the goods are put straight onboard rather than in a container terminal. If the items must be delivered to a container terminal, CFR will not be applicable.

Incoterms®: Cost and Freight (Port) - Cogoport

<blockquote id="">The ICC has divided Incoterms® under 11 heads. In this blog post you will get to know about the Incoterm® Cost, Insurance and Freight. </blockquote>International Commercial Terms – commonly known as Incoterms® - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1st January 2020. The ICC first published the Incoterms® in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.International trade involves transactions between territories that have different rules and regulations. Incoterms® are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms® to decide who bears the cost and when the risk gets transferred from seller to buyer.<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CIF" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" loading="lazy" alt="638f221ea0a3531379525477_Blog-Creative-1.png"></div></a></figure><h3 id="">Cost, Insurance and Freight (Port): Overview</h3>Cost, Insurance and Freight (CIF), a commercial clause in Incoterms 2020, states that the seller is responsible for all costs up to and including delivery of the products and payment of settlement for carriage and insurance to the designated port.The use of CIF is limited to ocean and inland waterways, and it is typically reserved for bulk cargo, non-containerized commodities, and situations in which the seller has direct access to the vessel for the purpose of loading the goods.When a seller uses CIF in their shipping clause, they agree to bear the entire cost of exporting and transporting the products up until they are loaded onto the ship. The buyer obtains control of the shipment and is in charge of importing and transporting the items to their destination once they are securely loaded aboard the boat.<figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><div id=""><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638dcdd4f5ce0255d4fdc8c8_Cost%20Insurance%20and%20FreightV2%5B92%5D.jpg" loading="lazy" alt="Incoterm - Cost, Insurance and Freight (CIF)" width="auto" height="auto" style="width: auto; height: auto;"></div></figure><h3 id="">Cost, Insurance and Freight: Seller’s Responsibilities</h3>The seller manages much more than just making sure the cargo is loaded onto a container ship. Their complete obligations consist of:1) Export packaging: Ensuring that the cargo is appropriately packaged and ready for shipment. Some exporting nations need particular markings be placed on a product's package or product itself.2) Loading charges: Expenses incurred in transporting the cargo from the seller's warehouse to the port.3) Delivery to port/place: All costs of transportation incurred in transferring the cargo from the seller's warehouse to the port. 4) Taxes, duty, and customs: Any duties related to the cargo's export that are related to customs. The seller shall bear all costs associated with any customs inspections and related fees. 5) Origin terminal charges: These are the loading port handling fees.6) Loading on carriage: The costs involved in putting the goods aboard the ship.7) Carriage charges: The price of transporting a shipment from its loading port to its final destination.8) Insurance: According to CIF Incoterm® , the seller must have insurance coverage for the cargo up until the port of destination.<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CIF" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" loading="lazy" alt="638f221ea0a3531379525477_Blog-Creative-1.png" style="width: 886px; height: 129px;"></div></a></figure><h3 id="">Cost, Insurance and Freight: Buyer’s Responsibilities</h3>The seller transfers the shipment and all risks to the buyer as soon as the cargo is loaded aboard the ship. The following obligations apply to the buyer when they are in charge of the shipment:<ul id=""><li id="">Destination terminal charges: These fees, also referred to as destination handling charges (DTHC), include everything from cargo transfer inside the terminal to offloading. </li><li id="">Delivery to destination: Organizing the procedures for the cargo's transfer from the port to the place where it will be delivered.</li><li id="">Unloading at destination: Any expenses related to loading the cargo onto the truck once it has reached the delivery location.</li><li id="">Taxes, duties, and customs: Complete import requirements, including duty, taxes, and customs clearance. The buyer is in charge of fixing any issues that arise from a customs inspection or an issue with the importation.</li></ul><h3 id="">CIF: Advantages for the Buyer</h3>All fees for exporting the items from the country of origin are covered by the seller. CIF becomes a viable alternative when the buyer has insufficient knowledge with the origin country and lacks the relationships to help with local transportation and exportation since it enables the seller to handle most of the shipment that takes place outside of the destination country.This may seem attractive to many people because it carries low risk for the buyer. &nbsp;CIF requires the seller to ensure that their goods can be properly exported if the buyer is unaware of the export regulations for the product. When transporting hazardous or dangerous commodities or making purchases in nations where the norms and regulations are not adequately documented, this can be useful.Insurance paid for by the seller might help to minimize some of the losses in the event of a maritime problem, such as piracy, damage brought on by bad weather.When a buyer already works with a third-party logistics provider who can manage domestic and import shipments, CIF enables the buyer to make use of their existing resources without having to hunt for new ones in the nation of origin.<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CIF" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" loading="lazy" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png"></div></a></figure><h3 id="">CIF: Disadvantages for the Buyer </h3>Once the items are on board the conveyance vessel, all risk is assumed. The buyer is in charge of fixing or covering losses when something goes wrong during the shipping process.The buyers are responsible for paying all import taxes and fees. The price of insurance and shipping is included in the sale price because the seller is required to obtain insurance. When importing under CIF Incoterm® , the buyer is responsible for paying freight costs as well as insurance and customs duties and taxes on top of the product price.The destination handling fees must be paid by the buyer, which is not a bad thing; nevertheless, if not agreed beforehand, it may result in additional hidden costs for the buyer. The destination handling fees for the buyer may occasionally be increased by shipping companies shipping on behalf of customers under CIF conditions because this is an unavoidable expense.You can have a hard time receiving money from your insurance claim if your cargo is damaged. If your shipment is damaged, you might not learn about it until the container has been unloaded and you have given your seller the full sum due. CIF Incoterm® often describe the beneficiary as the seller. In that case, the seller completed the deal, and the seller—and not the buyer—would be responsible for paying the insurance claim.<h3 id="">When to Use Cost, Insurance and Freight Incoterm® </h3>Only sea and waterway shipments should use CIF Incoterm®. CIF can be helpful for people who are just starting out with importing because it enables them to understand the importing procedure before they are required to know the export process.

Incoterms®: Cost, Insurance and Freight (Port)

<blockquote id="">The International Chamber of Commerce has divided Incoterms® under 11 heads. In this blog post you will get to know about the Incoterm® Cost Paid To (Place). </blockquote>International Commercial Terms – commonly known as Incoterms® - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1st January 2020. The ICC first published the Incoterms® in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem. International trade involves transactions between territories that have different rules and regulations. Incoterms® are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms® to decide who bears the cost and when the risk gets transferred from seller to buyer.<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CPT" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" loading="lazy" alt="638f221ea0a3531379525477_Blog-Creative-1.png"></div></a></figure><h3 id="">Carriage Paid To (Place): Overview</h3>Carriage Paid To (CPT) Incoterm® states that the cost of the items includes everything needed to transport the goods to the specified location. Only local shipping and unloading fees as well as import procedures are the buyer's responsibility.Once the items are delivered to the first carrier, typically at the origin port, the responsibility for the shipment is transferred. CPT is similar to an FCA agreement in that it can be applied to all modes of transportation, but unlike an FCA agreement, the delivery destination is not predetermined. Even though CPT is a less frequent Incoterm®, there are specific instances in which it can be applied.Since the buyer and seller must provide two central locations—which are not always the most obvious—CPT can be a complicated Incoterm®. The delivery location and the destination are the two points that must be determined in a CPT agreement. Delivery is the act of handing over items to the carrier that the seller has hired to carry the cargo to the customer. The buyer's risk starts at this moment. The cost of shipping the freight to the destination must also be covered by the seller. Although the buyer now bears the risk and obligation for the shipment, the seller is still in charge of delivering the shipment until it reaches the specified destination. Once the risk shifts from the buyer, he is obliged to pay the seller.<figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><div id=""><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638de18dee1edfd00c533d0b_Carriage%20Paid%20to%20V2%5B98%5D.jpg" loading="lazy" alt="Incoterm - Carriage Paid To (CPT)" width="auto" height="auto" style="width: auto; height: auto;"></div></figure><h3 id="">Carriage Paid To: Seller’s Responsibilities</h3>When transacting using CPT Incoterm®, the seller is accountable for the following:1) Export packaging: The vendor must put the sold goods in export packing that is suitable for transit.2) Loading cost: The seller is liable for any fees paid while the cargo is being loaded onto a truck at the seller's warehouse. 3) Delivery to port/place: All expenses related to moving the loaded items to the port or export location are the seller's responsibility.4) Origin Terminal Handling Charges (OTHC): These fees at the origin terminal are the responsibility of the seller. 5) Loading on carriage: The seller is responsible for covering the expense of loading the cargo into the carriage.6) Freight cost: These are the delivery costs, which the vendor is responsible for covering.7) Destination Terminal Handling Charges (DTHC): These expenses at the final terminal are also the responsibility of the vendor.<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CPT" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" loading="lazy" alt="638f224556fe413902d3d886_Blog-Creative-2.png"></div></a></figure><h3 id="">Carriage Paid To: Buyer’s Responsibilities</h3>When making a purchase using CPT Incoterms®, the buyer is in charge of the following steps:1) Delivery to destination: The cost of transporting the goods to the final destination is the buyer's responsibility once it has been unloaded from the carrier.2) Unloading at destination: When cargo arrives at warehouses, there occasionally exist unloading costs. It is the buyer's obligation to pay any costs that might be incurred.3) Taxes, duties and customs: All import fees must be paid by the buyer. This covers dunnage, penalties, inspections by customs, and holding fees.<h3 id="">CPT: Advantages for the Buyer</h3>The buyer is at less at risk when shipping under CPT and when the payment terms provide that the products must be paid for at the destination. The fact that the buyer is not compelled to pay for the goods until the cargo shows up at the stated location has considerable benefits for them.The buyer's obligation for a big portion of the logistics process is reduced because the seller is also in charge of providing the buyer with the Bill of Lading, or Airway Bill. The buyer does not have to deal with any export procedures or costs, which is an additional benefit.CPT can be helpful when an importer has an agency in charge of clearing the cargo once it reaches the destination country because it gives the buyer authority over the DTHC and customs clearance.<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CPT" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" loading="lazy" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png"></div></a></figure><h3 id="">CPT: Disadvantages for the Buyer </h3>Since the buyer is obligated to pay for the goods after they are in the custody of the seller's carrier, CPT places a significant degree of risk on them whether shipping by sea freight or air freight. The buyer is responsible for paying for the merchandise because the risk is transferred once the cargo arrives at the destination. The buyer typically has no idea when the products will be sent, which is a big risk.Since the seller is the one who contracts the carrier, they can ask for a Bill of Lading or Airway Bill before the cargo ever moves.<h3 id="">When to Use CPT Incoterm®</h3>The Incoterm® works extremely well when moving the cargo overland from one location to another. &nbsp;For instance, CPT performs remarkably well in cross-border trading, where the seller arranges the cargo for their carrier to transport the items across many nations.

Incoterms®: Carriage Paid To (Place)

<blockquote>The International Chamber of Commerce has divided Incoterms® under 11 heads. In this blog post you will get to know about the Incoterm® Carriage and Insurance Paid To (Place)</blockquote>International Commercial Terms – commonly known as Incoterms® - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1st January 2020. The ICC first published the Incoterms® in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.International trade involves transactions between territories that have different rules and regulations. Incoterms® are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms® to decide who bears the cost and when the risk gets transferred from seller to buyer. <a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CIP" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" alt="638f221ea0a3531379525477_Blog-Creative-1.png"></a><h3>Carriage and Insurance Paid To (Place): Overview</h3>Under the Incoterms® 2020 rules, Carriage and Insurance Paid To(CIP), indicates that risk passes to the buyer when the seller delivers the goods to the first carrier or to a different person specified by the seller at a designated place of shipping. The expense of transportation and insurance for delivering the products, at the very least, to the specified location, is the seller's responsibility.CIP is one of just two Incoterms® regulations (the other being CIF—Cost, Insurance and Freight) that indicates which party must purchase insurance is CIP.The amount of insurance required under CIP has increased with the publication of the Incoterms® 2020 rules to at least 110% of the value of the goods as specified in Clause A of the Institute Cargo Clauses rather than the lower level provided under Clause C, which was required for CIP in the 2010 rules and is still required for CIF. This is because CIP is often used for manufactured items with a higher value than the commodities that are more frequently delivered under CIF. The insurance underwriter must be able to establish a permanent residence there. <img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638dd53214dc6e56645636e2_Carriage%20and%20Insurance%20Paid%20To_V2%5B27%5D.jpg" alt="638dd53214dc6e56645636e2_Carriage%20and%20Insurance%20Paid%20To_V2%5B27%5D.jpg"><h3>Using CIP Incoterm® </h3>The seller is responsible for arranging international shipping and purchasing insurance under all C-group terms, including CPT. The designated location where liability is transferred is always on the side of the buyer.What distinguishes CPT and CIP from one another? When a seller arranges transportation, a portion of the risk that the buyer assumes is considered by CIP. In accordance with CIP, the seller is required to insure the goods in the buyer's favour to protect the latter from risk.CIP can be applied to any transport mode or situations when there are several transport modes. The seller is in charge of organising transportation to the specified location as well as insurance for the items. <h3>Similarity Between CIP and CPT</h3>The only significant difference between CIP and CPT is that the seller is responsible for transportation and insurance up until the designated port. CIP can be used to move goods via multiple transit modes, or multi-modal shipping. When the buyer receives the goods at the first port under CIP, the title is transferred. <a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CIP" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" alt="638f224556fe413902d3d886_Blog-Creative-2.png"></a><h3>Carriage and Insurance Paid To: Seller’s Responsibilities</h3>The seller manages much more than just making sure the cargo is loaded onto a container ship. Their complete obligations consist of the following:1) Costs: The seller has responsibilities till the named place of destination, and will bear costs such as: <ul><li>Warehouse charges.</li><li>Inland transit charges for transporting goods from the warehouse to the first port.</li><li>Payment of depot charges.</li><li>Payment of freight forwarder charges</li><li>Freight forwarder’s charges</li><li>Charges for air freight (if transported by air)</li><li>Charges for marine insurance (when goods are moved through ocean)</li><li>Charges for ocean freight and insurance premium</li></ul>2) Custom clearance and payment of duties: Customs clearance is a part of CIP, and the seller is responsible for paying all applicable export customs and duty fees. The seller will take care of the freight forwarding process and pay the settlement fees; he is also responsible for assembling and filing all necessary paperwork for customs clearance.3) Insurance: In a CIP transaction, the goods' insurance is paid for by the seller. The shipping requirements must be followed, and the seller is responsible for paying any registration and security permit fees. The seller must get goods coverage because he bears the risk of the items until they arrive at the designated port. After the products arrive at the designated port, the seller is not responsible for insuring them. The importer shall deliver all the required paperwork so that the buyer can follow the import regulations. <a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CIP" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png"></a><h3>Carriage and Insurance Paid To: Buyer’s Responsibilities</h3>Under the CIP Incoterm®, the buyer is accountable for the following:1) Costs: The buyer's obligations under CIP trade terms are restricted to the fees and terms stated in the contract. The buyer will be allowed to proceed with the deal immediately following the port of delivery because the place of delivery is crucial in a CIP transaction.It may be the first port, when fees are charged from the moment the shipment is transported to the port of the importer country, or it may be the second port, where fees for import procedures and inland transit are incurred.2) Freight terms: When the second port is the agreed-upon location for delivery, the buyer is responsible for both the unloading of the shipment at the designated port and the freight for the inland delivery of the shipment from the port to his warehouse. The buyer is responsible for paying the freight duty to transport the goods to the port in the importer country if the designated location is the first port.3) Customs clearance and payment of duties: The buyer is responsible for ensuring that he obtains all the paperwork from the seller required for importation under the CIP Incoterm®. The buyer will be responsible for covering costs like import taxes and tariffs since he assumes control immediately after the destination port.4) Insurance: In CIP, the buyer is under no duty in terms of insurance (referring to risk and damage of goods). The seller is responsible for paying the insurance coverage fees. According to the terms set forth by the parties, however, the buyer may choose to pay for additional coverage provided by the seller, i.e., insurance from the stated port to the buyer's warehouse. <h3>When to Use Carriage and Insurance Paid To Incoterm® </h3>CIP can be utilised in multi-mode transport because it is not limited to a certain freight method. The carrier issues a bill of lading to the seller, serving as proof that the goods have been taken by the carrier and the freight has been paid by the seller. This works particularly effectively for shipments covered by a letter of credit. For produced goods with a higher value, CIP works best.

Incoterms®: Carriage and Insurance Paid To

<blockquote>The International Chamber of Commerce has divided Incoterms® under 11 heads. In this blog post you will get to know about the Incoterm® Delivered at Place Unloaded (Place).</blockquote>International Commercial Terms – commonly known as Incoterms® - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1st January 2020. The ICC first published the Incoterms® in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.International trade involves transactions between territories that have different rules and regulations. Incoterms® are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms® to decide who bears the cost and when the risk gets transferred from seller to buyer.<a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=DPU" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" alt="638f221ea0a3531379525477_Blog-Creative-1.png"></a><h3>Delivered at Place Unloaded: Overview</h3>Delivered at Place Unloaded (DPU) calls for the seller to place the products at the buyer's disposal following their unloading from the incoming mode of transportation. This is the only Incoterm® that requires that the seller unload items at the destination is DPU.DPU can be used with any—and multiple—modes of transportation. A named place of destination should be agreed upon both the buyer and seller. Where appropriate, DPU requires the seller to clear items for export. Once the goods are unloaded, the risk is transferred from the seller to the buyer. This is the only Incoterm® that requires the seller to complete delivery by unloading the goods.This is the only Incoterm® that requires the seller to unload the contents, and it is frequently used for combined containers with many consignees. This is so that the seller can divide the cargo to make the goods available for each of the various consignees.&nbsp;Additionally, the seller should use this term if the things need additional or special handling for which they agree to be responsible. However, if unloading involves a lot of danger, expense, or complication, then Incoterm® might not be advantageous to the seller.<img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638ddc3fadbcad1385de8c61_Delivered%20At%20Place%20Unloaded%20V2%5B25%5D.jpg" alt="DeliveredAtPlaceUnloaded">The most recent Incoterm® as of now is DPU. It has replaced DAT (Delivery at Terminal) Incoterm®. The DPU Incoterm® is applicable to all forms of transportation, including combinations of modes. Until the products have been delivered to the agreed-upon location and have been unloaded, the seller is responsible for all risks of loss or damage.<h3>Delivered at Place Unloaded: Seller’s Responsibilities</h3>When transacting using DAP Incoterms®, the seller is accountable for the following:1) Cost: The seller shall be responsible for following costs in DAP Incoterm®:<ul><li>Warehouse rent for maintaining goods.</li><li>Packaging, labelling, and marking charges as per export standards.</li><li>Transport charges for inland movement.</li><li>Freight forwarder charges for handling logistics.</li><li>Documentation charges for creating and submitting the paperwork necessary for shipping process.</li></ul>2) Transfer of risk: The seller is still responsible for the items until they reach the designated port. Once the items are unloaded at the designated port, the seller remains responsible for any risk relating to damage to the products.3) Customs and duty: The seller is responsible for export customs procedures. He continues to be in charge of creating the required paperwork. The seller is responsible for covering all port fees, tariffs, and local fees associated with the customs clearance process.<a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=DPU" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" alt="638f224556fe413902d3d886_Blog-Creative-2.png"></a><h3>Delivered at Place Unloaded: Buyer’s Responsibilities</h3>Under the DPU Incoterm®, the buyer is accountable for the following:1) Cost: The buyer shall bear the following costs:<ul><li>Charges for import customs</li><li>Port clearing procedures</li><li>Charges for inland transport from port to warehouse</li><li>Warehouse charges after the delivery of goods</li></ul>2) Delivery terms: The buyer is required by DPU conditions to accept the seller's proof of documents at the destination port. He will accept the cargo that has been delivered to the port.3) Transfer of risk: Following delivery, ownership of the goods passes to the buyer. Additionally, the risk and damage will be assumed by the buyer if he omits to tell the seller of the designated port.4) Customs and duties: The buyer is accountable for import customs and duties when they transfer at the designated harbour. After that, he is still responsible for all risks and fees. This is where the distinction between the DAT and DDP shipping Incoterms® is evident. Under DDP, the seller retains ownership of the duties, payments, and documentation.<a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=DPU" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png"></a><h3>When to Use DPU Incoterm®</h3>This rule benefits the seller in situations where they are stronger, holding them accountable and responsible for all tasks in the export country, and it favours the buyer in situations where they are stronger, holding them accountable and responsible for all tasks in the import country. For the main freight, the seller is likewise liable and accountable. A terminal serving as the stated location where the buyer is responsible for unloading is also to be considered.To avoid confusion in the transfer of risk and cost, it is crucial to clearly designate the place of delivery. Additionally, the point of import clearance must be evaluated. In any instance, there must be an implicit partnership between the buyer and seller to ensure that the paperwork and procedures go well.

Incoterms: Delivered at Place Unloaded - Cogoport

<blockquote>The International Chamber of Commerce has divided Incoterms® under 11 heads. In this blog post you will get to know about the Incoterm® Delivered at Place (Place)</blockquote>International Commercial Terms – commonly known as Incoterms® - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1st January 2020. The ICC first published the Incoterms® in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.International trade involves transactions between territories that have different rules and regulations. Incoterms® are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms® to decide who bears the cost and when the risk gets transferred from seller to buyer. <a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=DAP" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" alt="638f221ea0a3531379525477_Blog-Creative-1.png" style="width: 969px; height: 141px;"></a><h3>Delivered at Place (Place): Overview</h3>The Delivery at Place (DAP) Incoterm® can be used to any mode of transportation, including multiple modes. According to DAP rules, the seller is in charge of all expenses and risks related to delivering the items to the final agreed-upon location, which is often the buyer's premises, and the buyer and seller must agree on the place of destination. The buyer is alone accountable for importing and unloading the cargo when using DAP for sea, air, road, and rail freight.The buyer should also specify the terms of unloading at the selected location because he will be responsible for paying the unloading fee in addition to the import duties and other local taxes. At the designated port, the risk is transferred from the buyer to the seller. <img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638dd89c57859fdec5f16778_Delivered%20At%20Place%20V2_%5B90%5D.jpg" alt="638dd89c57859fdec5f16778_Delivered%20At%20Place%20V2_%5B90%5D.jpg"><h3>Delivered at Place: Seller’s Responsibilities</h3>When transacting using DAP Incoterm®, the seller is accountable for the following:1) Terms of delivery: The terms of unloading at the chosen place should also be specified by the buyer because he will be liable for paying the unloading cost in addition to the import tariffs and other local taxes. The buyer's risk is transferred to the seller's risk at the appointed port.2) Costs: The seller shall pay for the following expenses: <ul><li>Warehouse charges for goods</li><li>Transport charges from warehouse to the port</li><li>Charges payable to freight forwarder</li><li>Charges payable at terminal</li><li>Documentation cost</li></ul>3) Freight: The seller covers DAP freight because he is responsible for both inland transportation from the warehouse to the port as well as carriage up to the target port. Road or rail transportation is acceptable, and the seller is responsible for arranging shipping from the initial port to the target port.4) Insurance: Insurance is included in the DAP incoterm. If the items are being transported by ocean or sea, the seller may pay for coverage for damage to the products up until the designated port and may additionally get maritime insurance. The seller is responsible for the insurance of the products under DAP because the risk of damage to the commodities remains with him until the items are delivered at the designated port.5) Customs and duties: The seller is responsible for paying all export-related levies and taxes. He is responsible for providing all paperwork required for customs procedures, including the bill of lading, the commercial invoice, the insurance certificate, the packing list, etc. <a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=DAP" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" alt="638f224556fe413902d3d886_Blog-Creative-2.png"></a><h3>Delivered at Place: Buyer’s Responsibilities</h3>When transacting using DAP Incoterm®, the buyer is accountable for the following:1) Delivery terms: At the port of the destination nation, items must be unloaded by the buyer. Later, he is also responsible for the inland transportation of the commodities from the specified port to his own warehouse.2) Costs: The payment terms under DAP are as follows: <ul><li>Charges payable for import customs</li><li>Unloading charges</li><li>Charges for inland transportation</li><li>Charges payable for warehouse after deliver at port</li></ul>3) Terms of freight: The seller has already covered the cost of transportation; therefore, the buyer's only obligation is to handle import customs procedures and inland transit till his own warehouse.4) Insurance: As long as the goods are not damaged before they reach the port of the buyer's nation, there is no need for the buyer to get insurance.5) Customs clearance and duties: According to DAP, the buyer is in charge of the import customs procedures. Therefore, the buyer must acknowledge the documentation evidence offered by the seller. As already indicated, it is the buyer's responsibility to offload the cargo at the final port.The consignee, which can either be the exporter or the importer depending on the agreed final destination, is responsible for paying costs, levies, and charges such freight demurrage charges, port charges, etc. incurred after the risk transfer under DAP Incoterm®. <a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=DAP" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png" style="width: 969px; height: 141px;"></a><h3>DAP: Advantages for the Buyer</h3>Understanding who is liable for covering any additional costs incurred throughout the transportation process gives the buyer a substantial advantage when shipping under DAP Incoterm®. Due to the reduced buyer risk, DAP provides a low liability option and a widely accepted agreement for customers who want to transfer all shipping risk to the seller.DAP can assist purchasers in controlling cash flow and inventory, particularly for costly commodities that need frequent reorders from buyers.&nbsp;The buyer will greatly benefit from this. Instead of waiting for the cargo to reach the seller's origin, they can order smaller quantities and have it delivered more quickly. <h3>DAP: Disadvantages for the Buyer</h3>Although this Incoterm® clearly states that the customer is responsible for paying all import taxes, duties, and clearance fees, in actuality, DAP can cause delays. Most of the time, customs clearance occurs prior to the cargo reaching the buyer's designated location, which necessitates that customs grant the shipment clearance before it is delivered to the buyer. <h3>When to Use Delivered at Place Incoterm® </h3>The fact that the DAP agreement gives a variety of alternatives that can be quite advantageous to both the buyer and seller is one of its most important features. As a result, whenever a seller is willing to enter into an agreement, it constitutes a viable Incoterm®. DAP can provide a brilliant solution if the buyer is buying things being imported into several nations, which might reduce the freight costs.

Incoterms®: Delivered at Place - Cogoport

<blockquote>The International Chamber of Commerce has divided Incoterms® under 11 heads. In this blog post you will get to know about the Incoterm® Delivered at Duty Paid (Place).</blockquote>International Commercial Terms – commonly known as Incoterms® - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1st January 2020. The ICC first published the Incoterms® in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.International trade involves transactions between territories that have different rules and regulations. Incoterms® are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms® to decide who bears the cost and when the risk gets transferred from seller to buyer.<a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=DDP" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" alt="638f221ea0a3531379525477_Blog-Creative-1.png"></a><h3>Delivered at Duty Paid: Overview</h3>According to the Incoterm® Delivered at Duty Paid (DDP), the seller is responsible for all expenses and risks associated with shipping the goods to the designated location. Furthermore, it is the sole condition in which the seller is responsible for import customs fees.Since the seller assumes most of the responsibility, a DDP arrangement benefits the buyer. However, the buyer may be better prepared to handle it if they remain alert and try not to rely totally on the seller for certain costs.The site of delivery or destination is crucial in DDP since it is at this point that all expenses and obligations pass from the seller to the buyer. Both parties to the contract may decide on the designated location.<img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638ddf6f26be9b4f50bef066_Delivered%20Duty%20Paid%20V2%5B22%5D.jpg" alt="638ddf6f26be9b4f50bef066_Delivered%20Duty%20Paid%20V2%5B22%5D.jpg"><h3>Delivered at Duty Paid: Seller’s Responsibilities</h3>When transacting using DDP Incoterm®, the seller is accountable for the following:1) Load and unload goods: The seller is ultimately responsible for the full course of action because DDP includes the loading and unloading process.2) Conditions for transport and delivery: The seller is in charge of getting the goods to the location of destination specified in the contract under the Incoterm® DDP. Road transport, shipping transport, and nominated place transport are just a few examples of the transportation-related operations engaged in the process.3) Customs and duties: The seller is responsible for handling customs clearance procedures and paying any applicable duties. In addition to managing the import and export customs processes, he is also responsible for paying all duties and taxes to the destination nation.4) Documents: the seller shall provide the following documents:<ul><li>Bill of Lading</li><li>Commercial invoice</li><li>Insurance certificate</li><li>Packing list</li><li>Export license</li></ul><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=DDP" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" alt="638f224556fe413902d3d886_Blog-Creative-2.png"></a><h3>Delivered at Duty Paid: Buyer’s Responsibilities</h3>Under the DDP Incoterm®, the buyer is accountable for the following:1) Unloading of goods: Once the products have been delivered by the seller, the buyer must unload them. The buyer is responsible for unloading and loading the items if the agreed-upon point of delivery is their port.2) Conditions for transport and delivery: Typically, the buyer is not involved in the shipping or delivery-related activities under the DDP Incoterm®. However, if the designated location is a port in the buyer's nation, the buyer is still responsible for loading the goods and covering the cost of transportation from the port to the warehouse.3) Costs: Since the seller provides all the documentation verification, DDP is a no cost option for the buyer. The only expenses incurred by the buyer are those that arise after the seller has completed delivery.4) Customs and duties: Customs clearance is not the buyer's responsibility because the seller will handle the import customs. However, in some circumstances, the import clearance procedures include risk, so the buyer, who is more familiar with regional standards and customs like GST and VAT taxes, may handle the process.<a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=DDP" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png"></a><h3>DDP: Transfer of Risk</h3>After the vendor has delivered the items, from the port to the door, the buyer is responsible for all risk and liability relating to those goods.<h3>DDP: Advantages for the Buyer</h3>Any taxes, delivery fees, or other unexpected charges incurred during the shipment and delivery procedure are not the buyer's responsibility. Since both the exporting and importing countries may demand inspections of differing degrees, which expenses are always passed on to the shipper, this can generally be advantageous.The buyer only needs to wait for their shipment to arrive and accept it after the goods have been dispatched. Since the customer is aware that the seller is responsible for any damage that may occur to the goods while in transit, this can significantly reduce their stress levels.<h3>When to Use a DDP Incoterm®</h3>When the seller expresses confidence in shipping your country's products and has a successful track record of delivering to other customers using DDP Incoterms®, it may also be wise to utilise these terms.Only when you can put your trust in your supplier and their freight forwarder should you pick DDP. The seller is not required to insure the goods for pre-carriage or main carriage. Until the items are unloaded from the vehicle at the specified place of destination, typically the buyer's place of business, the buyer is free from any danger or expense.

Incoterms®: Delivered Duty Paid - Cogoport

&nbsp;However, this $100 billion industry faces headwinds of chip shortage, overbooking, rural distress, fuel price-led inflation, and skyrocketing commodity prices. Read on to know more.The Indian automobile industry is an inspiring success story. In the past four decades, it emerged as a shining light to catalyze India’s Gross Domestic Product (GDP) and the whole economy.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 3.png" width="auto" style="width: auto; height: auto;"></a>The global management consulting firm McKinsey, termed the automobile industry as one of India’s <a href="https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/the-indian-automotive-industry-from-resilience-to-resurgence" id="">core sectors</a>, estimating the manufacture of transport equipment to be worth up to 12 percent of the Gross Value Added (GVA) in the manufacturing sector. As one of the leading driving forces of the economy, the auto industry contributes to about 49 percent to India’s manufacturing GDP and 7.5 percent to the GDP at large. The auto realm’s value chain is responsible for 32 million jobs. Interestingly, the Indian automobile market overtook Germany, Europe’s largest economy and export powerhouse, to emerge as the world’s fourth largest in 2018, valued at nearly $100 billion. The industry, estimated to account for 65 million jobs by 2026, has gone through many disruptions that began around the outbreak of the Coronavirus pandemic. Chip shortage, multiple and duplicate bookings, rural distress, fuel price-led inflation, a steep hike in commodity prices, container shortage, and surging logistics costs, are some of the challenges disrupting the Indian automobile industry. <h3 id="">Drop in Sales</h3>Domestic automobile sales dropped to the lowest level in India in nine years to 17.51 million in 2021 – 22. Earlier, the low was reached in 2012 – 13 when total wholesale fell to 17.82 million, according to the Society of Indian Automobile Manufacturers (SIAM). Two-wheeler sales took the biggest hit, falling to the lowest rate in a decade in 2021 – 22 to log 13.4 million units. The last time sales were so low was back in 2011 – 2012 when the sales were at the same rate. &nbsp;Within two years of unlocking the all-time highest two-wheeler sales of 21 million units in FY19, the numbers tumbled to the low registered in 2021 – 22. Even decent sales of electric two-wheelers (300,000), could not offset the lows touched in the overall two-wheeler sales. Similar was the case with internal combustion engine (ICE) powered three-wheeler sales, which logged only 260,000 units, almost 50 percent lower than the highest sales volumes. ‍<a href="[11:10 am] Raghav Sand https://app.cogoport.com/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-2.png" width="auto" style="width: auto; height: auto;"></a><h3 id="">Exports show an optimistic outlook &nbsp;</h3>Despite the depressing domestic performance of the automobile industry, pockets of exports have extended some optimism in&nbsp;the outlook. Passenger vehicle exports logged the highest numbers in eight years, 576,000 since 2013 – 14, rising from 440,000 units in FY21. India achieved its highest passenger vehicle exports of 596,000 units in 2013 – 14. Meanwhile, two-wheelers' exports put up a better show, logging exports of 4.4 million units, translating into the highest ever growth in exports. <h3 id="">Under-utilization of capacity</h3>In 2021 – 22, India had an installed automobile production capacity of nearly 35.5 million units but only 22.9 million automobiles were manufactured. Though the 7 million units production capacity belonged to passenger vehicles, only 3.6 million were made. Including commercial vehicles, four-wheelers manufacturing capacity utilization was estimated to be 63.64 percent, whereas for two and three-wheelers it was around 61 percent. Unused manufacturing capacity aggravates layoffs, a drop in job creation potential and investment, and eventually affects the economy. In the past five years, as many as five manufacturers—UM Motorcycles, MAN Trucks, Harley Davidson, and Ford—quit production in the South Asian country, indicating that some challenges are being faced in the Indian economy.CRISIL Director Hemal Thakker notes the income of people in the upper and upper middle-end of the income pyramid is now higher than two years ago, which is to have little effect on all car segments, except entry-level cars in 2022 – 23. Vinkesh Gulati, president of the Federation of Automobile Dealers Association (FADA), hopes that FY23 will be better than the previous fiscal, owing to normal monsoon forecasts which could give rise to normal crop production. Considering that most people are now vaccinated against COVID, their immunity is expected to be better. Thereby more money is saved from healthcare expenses to fund the purchase of two-wheelers, cars, tractors, and other automobiles. ‍<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" width="auto" style="width: auto; height: auto;"></a><h3 id="">Chip shortage</h3>After the Coronavirus outbreak, supply chains to the automotive industry have been disrupted. Irregular automobile production and quicker than anticipated recovery in some markets, has emerged as a crisis. In addition to the demand from the auto industry for chips, whose production is interlinked to several geographies for components, work from home driven demand for computers, cell phones, and other electronic gadgets amid the Coronavirus pandemic outstripped chip supplies. According to Maruti Suzuki’s Chief Executive and Managing Director, Hisashi Takeuchi, the chip shortage will continue, but he outlined that the circumstances could fare better than last year. Kavan Mukhtiyar, Partner and Leader, PriceWaterHouseCoopers India (PWC) observed that the paucity of semiconductors and other supply chain hiccups are actually impeding higher growth. Mukhtiyar feared that this crisis could prolong for nearly a year more. At the same time, Russia and Ukraine, neighboring countries that were known to play a key role in chip supply chains globally, are currently in a state of war, further disrupting semiconductor supply chains.The stringent Chinese zero-Covid strategy has shut down important manufacturing hubs crucial for global supply chains. According to Srivastava, Maruti Suzuki did not have visibility on chip supplies for over a few weeks, by the end of April. &nbsp;<h3 id="">Chips shortage results in fewer features</h3>As many modern automobile features require chips, it is feared that Indian car manufacturers may emulate their international peers in <a href="https://www.deccanherald.com/business/business-news/chip-shortage-may-force-automakers-to-cut-features-1108232.html" target="_blank" id="">cutting some fancy features</a>, in light of the chip shortage. Indian car companies have been compelled to prune production and raise prices. This resulted in orders getting delayed and raised the focus on car models needing fewer chips. Akin to American automaker General Motors (GM) doing away with heated seats, a top feature in colder climate countries, due to a semiconductor shortage, Indian companies may take a leaf out of GM’s book by obviating features such as voice-assist, an in-built internet connection, and the 360-degree camera. <h3 id="">Chips shortage amid thousands of pending orders</h3>By the end of April 2022, amid chip scarcity, Indian car makers were staring at a pending orders pile of up to 750,000. This was India’s largest-ever figure of pending car orders with Maruti Suzuki alone counting nearly half of the orders. Affected by the shortage and delays, all compressed natural gas (CNG) powered models from the 40-year-old manufacturer have a waiting period stretching up to nearly six months of time, especially the CNG Ertiga model. Mahindra &amp; Mahindra (M&amp;M) and Tata Motors together were sitting on pending orders piles of up to 375,000 even as car models such as Hyundai Creta, Tata Nexon, Punch, Thar, and Mahindra XUV 700 also are high in demand. India’s top four car manufacturers, Maruti Suzuki, Hyundai, M&amp;M and Tata Motors, account for 80 percent of the passenger vehicle market. Meanwhile, Carens and Slavia, new models from Kia and Skoda have a waiting period of up to six months and three months respectively. However, car makers believe that the ballooned order pile may not truly represent the actual demand for vehicles as many car buyers are making multiple bookings.Shashank Srivastava, Senior Executive Director for Marketing and Sales, Maruti Suzuki noted that buyers are not only booking cars with multiple dealers for a single product but are also booking vehicles from other brands, with the plan to go for the model which gets delivered first. Srivastava highlighted that a single buyer going for multiple bookings has also raised the number of cancellations across the industry. Besides the phenomena of overbooking and cancellations, dealerships have also seen a dip in enquiries due to lengthy waiting periods. &nbsp;‍<a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-1.png" width="auto" style="width: auto; height: auto;"></a><h3 id="">Rural distress</h3>Though demand emanated majorly from rural areas during Coronavirus first wave, the second wave did not spare it. Gulati noted that <a href="https://auto.economictimes.indiatimes.com/news/industry/indias-auto-market-at-a-decade-low-6-red-signals-from-high-fuel-prices-to-chip-shortage-stall-the-road-to-recovery-this-year/91061638" target="_blank" id="">unemployment and inflation, are two big worries</a> and the fortunes of rural demand depend on spending, even as the government is raising expenditure on infrastructure with high budgets. This is important to uplift the sentiment of rural consumers. Unfortunately, farmers’ income in India did not rise to expected levels. Though tractor sales were doing fine for a good amount of time during the pandemic, they started to plummet in August 2021. Barring a flat October, tractor sales declined by double digits for seven months, a development which points at economic challenges. Tractor sales in India fell by 17 percent in August, 15 percent in September, were flat in October, 22.5 percent in November and 23 percent in December. Analysts point that the decade-low demand for two-wheelers and declining tractor sales are a sign of difficult economic conditions for India. Significantly, utility vehicles surpassed cars in attracting demand for the first time, including entry-level cars, sought after in rural areas. The share of rural purchases in passenger car sales declined to 38 percent in Q4, FY22 from 41 percent in Q1 FY21, considering the strain on rural incomes and swelling inflation, which hurts the ability to spend money on discretionary items. The rural economy continues to be battered as the demand for minimum wages is rising consistently at a time when the monetary allocation for Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) has been slashed to INR 7.3 million in FY23 from INR 11.1 million, a year ago. Meanwhile, the two-wheeler segment is expected to face some headwinds as On-Board Diagnostics II (OBD II) is scheduled to be implemented from the beginning of the next fiscal year, which will add to the cost of the vehicle. CRISIL research highlighted that OBD II will hike two-wheelers prices up to 6 to 7 percent plus whatever price increases companies will bring into effect, for various reasons such as rising commodities prices, geopolitics, and others. <h3 id="">Inflation due to skyrocketing fuel prices</h3>More than a decade ago, India transitioned into the difficult era of unregulated fuel prices, from the regulated fuel prices regime. Back then, there were no daily hikes in fuel prices. Unlike the international practice, petrol and diesel prices were raised only when the government allowed the oil marketing companies to do so. Following deregulation, and later syncing of fuel prices to international crude prices in 2016, Indians started witnessing daily price hikes of petrol and diesel, which was unheard of for them, a few years ago. As India’s federal government started raising fuel prices frequently, petrol and diesel prices touched INR 100 for the first time in June 2021 and continue to hover over this unexpected mark. Between 2014 – 15 and April – January 2021, the Government of India’s tax collection on petrol, diesel, and natural gas shot up by nearly 300 percent. Fuel prices in India has the effect of cascading inflation onto everything from freight prices, to fruits and vegetable prices. Due to dearer petrol, diesel, and cooking gas prices, consumer food prices went up by 100 percent between March 2021 and March 2022. In the near future, fuel prices in India will continue to be vulnerable, as the Russia – Ukraine war shows no sign of ending. The risk to inflation due to fuel prices will continue. <h3 id="">Dearer commodity prices</h3>As raw materials comprise the lion’s share of the cost for car makers, ranging up to nearly 78 percent, any increase in their cost is directly proportional to the final price of the car. Mainly due to the Russia – Ukraine war, prices of commodities like platinum, rhodium, copper, aluminum, steel, and plastics have been high for two years. The price of nickel rose by 219 percent, aluminum (136 percent), zinc (108 percent), copper (101 percent), HR Steel (91 percent), and CR steel (77 percent), between April 2020 and March 2022. Even the precious metals used in automotive electronics have seen an upward price trend.

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