How Custom Packaging Creates Amazing Customer Experiences

Managing the global supply chain for a business – no matter how big or small – is no joke! Freight shipping alone is a source of so many questions for the uninitiated. It’s full of complex jargon, including a bunch of esoteric three-letter acronyms such as CIF, EXW, and FOB. Those are incoterms, and they are what we’ll talk about today.

In short, incoterms are rules that govern the responsibilities of buyers and sellers. These are important to understand not simply because you need to know a bunch of acronyms, but because understanding them helps you understand the steps in the freight shipping process.

There are nine places that goods can pass through as part of the freight process, in this order:

  1. Works – the factory
  2. Carrier – transportation to the next transport vessel
  3. Alongside Ship – next to the cargo shipping
  4. On Board – on the cargo ship
  5. Border – crossing the border into the destination country
  6. Arrival – arriving at the port of entry
  7. Terminal – the terminal at the port
  8. Destination’s Place – a drop-off location of the buyer’s choice
  9. Buyer’s Warehouse – a final storage location for the inventory

Incoterms determine at which precise point goods stop being the responsibility of the seller and start being the responsibility of the buyer. This has all kinds of implications for if goods are lost in shipping, insurance policies, and more. Indeed, the precise incoterms you go with can even be used as a bargaining chip when negotiating prices with your supplier.

One last detail before we jump right into incoterm definitions. Fulfillrite specializes in order fulfillment. We don’t directly work with freight shipping. We instead source that work to our industry partners like Shapiro. However, the vast majority of our customers have to go through this process, so it’s our best interest to make sure you’re informed!

EXW – Ex Works

Ex Works is the simplest of all incoterms, but it’s also the least favorable for the buyer. Under Ex Works terms, the seller relinquishes all responsibility of your goods once they’re done manufacturing them. They place the goods somewhere convenient and then the buyer is responsible for collecting the goods, clearing them for export, and so on.

FCA – Free Carrier

Ex Works is the simplest of all incoterms, but it’s also the least favorable for the buyer. Under Ex Works terms, the seller relinquishes all responsibility of your goods once they’re done manufacturing them. They place the goods somewhere convenient and then the buyer is responsible for collecting the goods, clearing them for export, and so on.

CPT – Carriage Paid To

Ex Works is the simplest of all incoterms, but it’s also the least favorable for the buyer. Under Ex Works terms, the seller relinquishes all responsibility of your goods once they’re done manufacturing them. They place the goods somewhere convenient and then the buyer is responsible for collecting the goods, clearing them for export, and so on.

Share this article

Don’t want to miss any insights?

Leave a Reply

Your email address will not be published. Required fields are marked *

scroll box
scroll box
scroll box
scroll box
scroll box
scroll box
scroll box
scroll box
scroll box