Incoterms® are a set of international trade terms that are used to define the responsibilities of buyers and sellers in the transportation of goods. These terms, which are updated every ten years, provide a common language for international trade, making it easier for businesses to understand their rights and obligations when buying or selling goods overseas. The latest version of Incoterms®, known as Incoterms® 2020, was introduced on January 1st, 2020, and will be in effect until December 31st, 2023.
As an Australian consumer, it is important to understand how Incoterms® 2020 will affect your rights and obligations when buying goods from overseas. Here are some key points to keep in mind:
- The terms of delivery: Incoterms® 2020 defines 11 different terms of delivery, each of which specifies the point at which the risk of loss or damage to the goods passes from the seller to the buyer. Some of the most commonly used terms include FOB (Free on Board), CIF (Cost, Insurance, and Freight), and DDP (Delivered Duty Paid).
- The responsibilities of the seller and buyer: Incoterms® 2020 clearly defines the responsibilities of both the seller and the buyer in the transportation of goods. For example, under FOB, the seller is responsible for loading the goods onto the shipping vessel, while the buyer is responsible for arranging and paying for transportation from the port of loading to the port of destination.
- The cost of transportation: Incoterms® 2020 also specifies who is responsible for paying the cost of transportation. For example, under CIF, the seller is responsible for arranging and paying for transportation, while the buyer is responsible for paying for insurance.
- The cost of customs clearance: Under Incoterms® 2020, the cost of customs clearance is the responsibility of the buyer. This includes the payment of any duties, taxes, and other charges that may be imposed by the authorities in the country of import.
- The risk of loss or damage: Incoterms® 2020 also defines the point at which the risk of loss or damage to the goods passes from the seller to the buyer. For example, under FOB, the risk of loss or damage passes when the goods are loaded onto the shipping vessel, while under DDP, the risk of loss or damage remains with the seller until the goods are delivered to the buyer’s place of business.
As an Australian consumer, it is important to understand how Incoterms® 2020 will affect your rights and obligations when buying goods from overseas. By familiarizing yourself with the terms of delivery, responsibilities of the seller and buyer, cost of transportation, customs clearance, and risk of loss or damage, you can make more informed decisions when buying goods from overseas.