Division Of Responsibilities For Transportation

EXW (Ex Works) is an international trade term that means delivery is completed when the seller hands the goods to the buyer at a designated location (such as the seller's premises, factory or warehouse). Under this clause, the seller assumes minimum liability and the buyer bears all costs and risks associated with receiving the goods at the seller's location. However, if the parties agree that the seller will be responsible for loading the goods and bear all costs and risks associated with shipment, this should be expressly stated in the sales contract. If the buyer is unable to handle export formalities directly or indirectly, and the seller agrees to load the goods and bear the related costs and risks, FCA should be used.

Obligation:
Seller's Obligations (A):

Provide qualified goods:
The seller must provide goods that comply with the terms of the sales contract, together with a commercial invoice or any equivalent electronic message, and any other documentation required by the contract to demonstrate the conformity of the goods.

Licenses, permits and procedures:
The Seller must, at the Buyer's request and risk and expense, assist the Buyer in obtaining all assistance necessary for customs procedures, including export licenses or other official permits required for the export of the goods.

Transport and insurance contracts:
a) Contract of carriage: no obligations.
b) Insurance contract: no obligation.

Deliver goods:
The seller must deliver the goods to the place specified by the buyer within the agreed time frame or date, or, if nothing is specified, within the times customary for the delivery of such goods. If there is no specific delivery point agreed upon within the designated location, or there are multiple delivery points, the seller can choose the most appropriate delivery point based on its own purposes.

Risk transfer:
Except as provided in B5, the seller must bear all risks of loss of or damage to the goods until delivery in accordance with A4.

Cost allocation:
Except as provided in B6, the seller must bear all costs associated with the goods until delivery in accordance with A4.

Note to buyer:
The seller must give the buyer adequate notice of when and where he can take possession of the goods.

Delivery document, shipping document or equivalent electronic message:
No obligation to.

Inspection, packaging and marking:
The seller must pay for any inspection required to deliver the goods (e.g. quality inspection, measuring, weighing, counting). The seller must bear the cost of providing packaging necessary for the carriage of the goods (unless customary specification specifies that the goods shall not be packaged) and of affixing appropriate labels to the packaging.

Other obligations:
The Seller must provide all assistance to the Buyer, at the Buyer's request and risk and expense, in obtaining any documents or equivalent electronic information required by the country of delivery and/or origin for the export and/or import of the Goods.

Buyer's Obligations (B):

Price payment:
The buyer must pay the price in accordance with the terms of the sales contract.

Licenses, Permits and Procedures:
The buyer must obtain any necessary import/export licenses or other official permits and complete all customs formalities where required.

Transport and insurance contracts:
a) Contract of carriage: no obligations.
b) Insurance contract: no obligation.

Took the goods:
According to A4 and A7/B7, the buyer must take possession of the goods at the time of delivery.

Risk transfer:
The buyer must bear all risks of loss or damage to the goods from the time of delivery in accordance with B5.

Cost allocation:
The Buyer must pay all costs associated with the Goods from the date of delivery as set out in B6.

Notice to sellers:
Once the Buyer has the right to determine the specific time and/or place for taking delivery within the agreed period, the Buyer must provide sufficient notice to the Seller.

Delivery document, shipping document or equivalent electronic message:
The buyer must provide the seller with appropriate evidence of receipt of the goods.

Cargo inspection:
The buyer must pay for any pre-shipment inspection costs, including those prescribed by the relevant authorities in the exporting country.

Other obligations:
The Buyer must pay all costs associated with obtaining documents or equivalent electronic information in accordance with A10 and reimburse the Seller for any costs incurred in assisting the Buyer.

Important notes:
Clearly Define Delivery Points: When using EXW terminology, it is critical to clearly specify the delivery point within a given location. If no specific delivery point has been agreed upon within the designated location and there are multiple delivery points available, the Seller may choose the most convenient one.
Loading of Goods: The Seller is not required to load the Goods onto any transport vehicle. If it is more convenient for the seller to load the goods, FCA should be used.
Export Customs Formalities: When using EXW, the seller is under no obligation to complete export customs formalities. The seller is only obliged to assist the buyer in handling export procedures when requested by the buyer, and the risks and expenses shall be borne by the buyer. Therefore, EXW should not be used when the buyer is unable to handle export formalities directly or indirectly; instead, FCA should be used.
Prompt provision of information: The Seller must promptly provide or assist the Buyer in obtaining from delivery and/or import all necessary documentation or equivalent electronic information required for the export and/or import of the Goods upon request and at the Buyer's risk and expense. or country of origin.
Insurance Information: At Buyer's request, Seller must provide information required for insurance.

Things to note when using EXW:
When using EXW, please clearly specify the delivery point within the designated location. If no specific delivery point has been agreed upon within the designated location and there are multiple delivery points available, the Seller may choose the most convenient one.
The seller is not required to load the goods onto any transport vehicle. If it is more convenient for the seller to load the goods, FCA should be used.
When export customs formalities are required, the seller is not obliged to go through export customs formalities. The seller is only obliged to assist the buyer in handling export procedures when requested by the buyer, and the risks and expenses shall be borne by the buyer. Therefore, EXW should not be used when the buyer is unable to handle export formalities directly or indirectly; instead, FCA should be used.
The Seller is obliged, at the Buyer's request and risk and expense, to provide or assist the Buyer in obtaining all necessary documentation or equivalent electronic information required for the export and/or import of the Goods from the country of delivery and/or origin.
At the buyer's request, the seller must provide the information required for insurance.

Definition:
FOB is the abbreviation of Free On Board, indicating the place where the goods are handed over at the designated port of shipment.

Applicable transportation methods:
FOB is suitable for Sea freightation and inland waterway transportation.

Key point:
The risk division point, delivery point and cost division point are all at the ship designated by the buyer at the designated port of shipment.

Main obligations of the buyer:
A. Pay the price of the goods according to the contract.
B. Arrange booking or ship chartering, pay the freight, and notify the seller of the ship name, loading location, and delivery time.
C. Bear the risks and costs of obtaining an import license or other approval certificate, handling the import of goods, and completing all customs formalities for transit to other countries when necessary.
D. Bear the costs and risks after the goods cross the ship's rail at the port of departure.
E. Receive the goods delivered by the seller and accept documents consistent with the contract.

The seller's main obligations:
A. On the date specified in the contract or within the specified period, deliver the goods that comply with the contract to the ship designated by the buyer at the designated port of shipment, and give sufficient loading notice.
B. Obtain an export license or other approval certificate and handle the export procedures for goods (customs declaration, export warehouse booking, etc.).
C. Bear the costs and risks until the goods cross the ship's rail at the port of shipment.
D. Provide a commercial invoice and the usual document proving that the goods have been delivered to the ship (usually a shipped bill of lading).

Things that should be paid attention to in actual business:
A. Clearly indicate in the trade contract whether the port of shipment is a sea port or a river port.
B. The seller is required to provide a clean shipped bill of lading, and the transit point is in the cabin of the designated port of departure.
C. Clarify the details of the ship-to-freight connection and make it clear which party will bear the additional costs.
D. Determine who will bear the loading costs at the port of shipment; the payment principle of terminal handling charge (THC) should be consistent with the Sea freight.
E. Negotiate with U.S. and other U.S. customers using the "United States Foreign Trade Definitions of 1941, Amendments" or the internationally recognized INCOTERMS 1990/2000.
F. Negotiate with customers to only specify shipping companies or shipping agents to reduce trade risks.

Definition
The full name of CIF is "Cost, Insurance, and Freight" (and the abbreviation of the designated destination). Specifically, the seller completes delivery when the goods pass the ship's rail (referring to the actual loading space inside the shipping vessel) at the port of departure. The seller bears the transportation and insurance costs from the port of departure to the port of destination, but the buyer is responsible for the risk of damage and loss that may occur after the goods are loaded on the ship.

Applicable transportation methods: CIF is applicable to Sea freightation and inland transportation. The trading country refers to the sea port or river port where the goods finally arrive.

Key points:
The risk and delivery point is on the ship at the loading port, and the cost sharing point is on the ship at the destination port.

Main obligations of the buyer:
A. Pay the price as stipulated in the contract.
B. Go through import procedures and obtain import licenses or other required approvals.
C. Bear all costs and risks after the goods cross the ship's rail at the port of departure.
D. Receive the goods delivered by the seller in accordance with the contract and accept the documents in accordance with the contract.

The seller's main obligations:
A. Deliver the goods that comply with the contract stipulations at the departure port to the ship at the designated destination port within the agreed time.
B. Go through export procedures and obtain an export license or other approval certificates (origin, inspection certificate, etc.).
C. Arrange the shipment and pay the sea freight to the destination port.
D. Apply for cargo transportation insurance and pay the insurance premium.
E. Bear all costs and risks before the goods cross the ship's rail at the port of shipment.
F. Provide commercial invoices, insurance policies, and bills of lading showing that the goods have been shipped.

Things to note in actual business transactions:
A. Conceptual misunderstanding: In CIF and FOB terms, both the delivery point and the risk point are on the ship at the loading port. The seller has fulfilled its obligations by loading the goods safely onto the ship at the port of shipment, and the risk after shipment shall be borne by the buyer. The seller hands over the insurance policy, bill of lading and other documents to the buyer, and the buyer handles the risk claim.
B. Booking and loading: Under CIF conditions, the seller arranges the ship independently, selects the shipping company's freight forwarder, and pays the freight and terminal fees. Generally, the seller does not accept the freight forwarder/shipping company designated by the buyer, but it can be accepted after confirming the freight and shipping date.
C. Insurance handling: The seller takes out insurance at the port of shipment and clarifies the insurance amount, insurance type, applicable insurance terms and the start and end date of insurance liability. The insurance policy should be endorsed and transferred to the buyer when the documents are presented to the bank.
D. Unloading costs: CIF generally uses the term PORT TO PORT, that is, the seller bears the costs of the shipping port, and the buyer bears the costs of the destination port.

Shipping Notices and Transshipment Information:
After the goods are loaded on the ship at the port of departure, the seller obtains the ocean bill of lading and submits the main shipping documents to the bank or delivers them to the buyer. The seller fulfilled all delivery obligations after procuring insurance, obtaining the insurance policy, paying Sea freight and settling incidental charges at the port of shipment.

Seller provides Buyer with comprehensive shipping notices upon shipment.

The seller does not guarantee that the goods will arrive at the port of destination, nor is it responsible for when they arrive.

The seller is not responsible for any damage, moisture, loss or other problems that may occur after the goods are loaded.
If the documents submitted by the seller show that the goods are damaged or missing, the buyer must still pay according to the documents. The buyer can seek compensation for damages from the shipping company/agent based on the bill of lading and the insurance company based on the insurance policy, rather than making a claim against the seller.

In actual commercial transactions, it is unreasonable for the buyer to demand compensation for damages, air freight and other expenses due to delays caused by misconnection, lost containers, delays in transit at transshipment ports, etc. When signing a trade agreement, it should be made clear that the seller cannot guarantee when the goods will arrive at the port of destination, nor the time of transshipment.

DDU (Delivered Duty Unpaid) means that the seller is responsible for delivering the goods to the designated location in the destination country or region in accordance with the buyer's requirements, and does not assume the obligation to pay duties and taxes. Under the DDU clause, the seller is solely responsible for delivering the goods to the destination designated by the buyer, while the buyer needs to handle relevant customs procedures and related fees independently.

The definition of DDU includes several aspects. First of all, DDU, as an international trade term, outlines the responsibilities and obligations of the buyer and seller during the delivery process. Second, it requires the seller to ship the goods to the destination specified by the buyer without the obligation to pay duties and taxes. This means that the buyer must independently manage the necessary customs procedures and bear the associated costs. Finally, DDU represents a delivery method suitable for international trade. The specific delivery location and conditions can be determined by negotiation between the buyer and the seller.

Under DDU conditions, the seller's primary responsibility is to ensure that the goods are safely delivered to the destination designated by the buyer. The seller's task is to arrange shipping and provide the necessary shipping documents and information. While sellers must ensure the safety and integrity of goods during delivery, they are not responsible for paying duties and taxes – that obligation rests with the buyer.

The definition of DDU emphasizes the collaborative and professional role of both parties in international trade. By shipping the goods to the destination designated by the buyer, the seller meets the buyer's requirements, and the buyer assumes the responsibility of handling customs procedures to ensure that the goods legally enter the destination country or region. When both parties have clear requirements for the delivery location and agree on customs duties and tax responsibilities in advance, the DDU clause shall apply.

Features of DDU:
Responsibility for duty payment: DDU means that the seller delivers the goods to the buyer and does not bear the responsibility for duty payment. This requires the buyer to independently bear the obligation to pay import duties, providing greater flexibility compared to other trade terms.

Risk and cost allocation: The allocation of transportation responsibility under DDU involves the seller bearing the transportation costs and risks from the origin to the destination. The seller is responsible for delivering the goods to the designated destination, including transportation, loading, unloading, packaging and other costs.

Benefits to buyers: DDU reduces the burden on buyers and eliminates customs duties, thus saving costs. In addition, the seller's responsibility for transporting the goods alleviates the buyer's transportation risks and costs, improving overall efficiency. DDU can expedite delivery to ensure timely arrival at the destination.

Suitable for complex trade scenarios: DDU is suitable for complex trade scenarios involving cross-border transactions between multiple countries or situations where tariff payment needs to be considered.

Assignment of transportation responsibilities under DDU:
DDU (Delivery Duty Unpaid) is an international trade term that represents the allocation of the seller's shipping responsibilities and risks during the transportation of goods. In a DDU transaction, the seller is responsible for transporting the goods to the destination designated by the buyer and bears all costs and risks until the goods are delivered to the buyer.

The allocation of shipping responsibilities in a DDU transaction covers all aspects. First, the seller's task is to properly pack and safely transport the goods to their destination. Secondly, the seller must go through export customs clearance procedures and bear relevant costs and responsibilities. In addition, sellers need to purchase transportation insurance for the goods to ensure the safety of the goods during transportation. Finally, the seller needs to assist the buyer with the import customs clearance procedures and bear the relevant costs and responsibilities.

The allocation of shipping responsibilities in DDU transactions places a greater burden on the seller and provides an advantage to the buyer by mitigating the buyer's shipping risks and expenses. At the same time, the buyer is also exempted from the responsibilities and expenses related to the transportation of the goods, ensuring that the goods reach the designated destination safely.

DDU transactions are suitable for scenarios where the buyer has strict requirements for the goods or the buyer is unable to independently handle import customs clearance procedures. In this case, choosing DDU trading meets the needs of buyers, reduces the burden on buyers, and ensures that the goods reach their destination safely.

Advantages and applicable scenarios of DDU:
Simplified import procedures: One of the main advantages of DDU is the simplified import procedures for the buyer. The seller is responsible for transporting the goods to the destination designated by the buyer and handling a series of processes such as export procedures, transportation, and customs clearance, which greatly reduces the buyer's operational burden.

Clear distribution of transportation responsibilities: DDU is suitable for situations where both parties have clear requirements for the distribution of transportation responsibilities. Under the DDU clause, the seller bears the responsibility for transportation to the destination, while the buyer only needs to pay the price and relevant duties, minimizing disputes arising from loss or damage during transportation.

Specific Duties Agreement: The DDU applies when there is a specific agreement between the buyer and seller regarding the payment of duties. In DDU transactions, the buyer bears the responsibility for tariff payment, which allows the seller to reduce transportation costs and enhance competitiveness.

Flexibility for countries with lax regulatory requirements: DDU has advantages when the importing country has relatively lax regulatory requirements for goods. DDU transactions have the seller handle export procedures and transportation, which can reduce regulatory review and inspection of imported goods, thereby improving customs clearance efficiency.

To sum up, DDU, as a trade method, has the advantages of simplifying operating procedures, clarifying transportation responsibilities, being suitable for special tariff agreements, and adapting to countries with loose regulatory requirements. Choosing DDU transactions based on specific circumstances in international trade can help both parties reduce costs and improve efficiency.

DDP is the abbreviation of Delivered Duty Paid, which means that the goods are delivered after paying customs duties at the designated destination. This arrangement means that the seller goes through the import customs clearance procedures at the designated destination and hands over the goods on the transport vehicle to the buyer to complete the delivery. The Seller bears all risks and expenses associated with the transportation of the Goods to the named destination, including any "duties" payable at the destination if customs formalities are required (covering the liability and risk of customs clearance, as well as fees, duties, taxes, and other fee).

Seller's Responsibilities (A) and Buyer's Responsibilities (B):
A1: Provide the goods in accordance with the contract, including commercial invoices or equivalent electronic information, and any other evidence required by the contract to prove that the goods meet the requirements.
B1: Pay the specified price according to the sales contract.
A2: Obtain any necessary import or export licenses or permits at your own risk and expense. When transiting, go through export, import, and customs transfer procedures as required.
B2: When customs procedures are required, assist the seller in obtaining the necessary import license or other official authorization at the seller's request and at the buyer's risk and expense.
A3: (a) Arrange transportation to the designated destination at the seller’s expense. If a specific delivery point is not specified or cannot be determined by convention, the Seller may select the most appropriate delivery point at destination.
(b) Payment of insurance premiums.
B3: (a) No obligation.
(b) Without Obligation.
A4: Deliver the goods to the designated destination on the agreed date or delivery period, and hand over the goods on the transport vehicle to the buyer or the person designated by the buyer.
B4: The seller receives the goods according to the requirements of A4 when shipping.
A5: All risk of loss or damage is assumed until delivery is completed in accordance with A4, except as specified in B5.
B5: Bear all risks of loss or damage from the delivery time specified in A4. If the buyer fails to fulfill its obligations under B2, the buyer must bear the additional risk of loss or damage. If the buyer fails to notify the seller in accordance with B7, the buyer must bear all risks of loss or damage from the agreed delivery date or expiration of the delivery period.

The text goes on to describe the responsibilities for costs (A6, B6), notifications (A7, B7), delivery documents (A8, B8), inspection, packaging and marking (A9, B9) and other obligations (A10, B10). ).

Regarding DDP operations at the port of destination or inland warehouse, the text highlights strategies for processing commercial documents, managing customs declarations and mitigating risks, especially regarding the accuracy of import and export values.

Important considerations include:
Export declaration amount: closely consistent with the FOB value, including the export tax rebate amount. Alternatively, include Sea freight in the declared amount (CIF value) for potential financial advantages.
Import Declaration Amount: Due to DDP, the importer is responsible for customs duties. By managing declaration amounts wisely, it is possible to understate declaration amounts to save costs while avoiding undue suspicion and potential repercussions.
Risk prevention: It is crucial to remain vigilant and focus on the integrity of the buyer. Coordination with banks, clear communication with clients about undervaluation strategies and cooperation with freight forwarders are key elements. Notify buyers of customs clearance and payment requirements promptly to prevent additional charges.
Note: The text covers other points such as the seller's obligation to deliver by DDP, the exclusion of certain charges (if mutually agreed), the buyer's unloading responsibility and the seller's option to choose the best delivery point (if not expressly specified). Additionally, it emphasizes the importance of clear communication between parties and the need for appropriate risk management in DDP transactions.