Skip to main content

2.10 Incoterms & Liability

2.10

Logistics costs and risks are defined by International Commercial Terms (Incoterms). Misunderstanding these terms results in unexpected freight bills and uninsurable losses during transit. This section mandates the specific Incoterms &to Liabilitybe used for procurement and shipping.

2.10.1 Transfer of Risk

  • DefiningExWorks Ownership:(EXW): UnderstandingBuyer owns the transfergoods ofthe risk.moment (e.g.,they leave the Supplier's dock. Buyer pays freight and insurance. ExWorksCommon for Customer Pickups.
  • DAP (Delivered at Place): meansSupplier weowns ownthe itgoods whenuntil itthey leavesarrive theirat factory;Dannie's dock. Supplier pays freight. DDPPreferred for Procurement.
  • DDP (Delivered Duty Paid): meansSupplier theypays ownall itfreight, untilduty, itand hitstax. ourPreferred door).for International Procurement.

2.10.2 Freight Forwarder Management

  • Consolidation: Use designated forwarders to consolidate small shipments into larger, cheaper movements.
  • Freight Forwarder Management:Insurance: ManagingShipments thevalued consolidatorsover who$10,000 movemust goodsbe acrossexplicitly borders.insured if moving under EXW terms.

Final Checklist

Term

Risk Transfer Point

Freight Payer

Preferred Usage

EXW

Supplier Dock

Buyer (Dannie)

Customer Pickups

DAP

Dannie Dock

Supplier

Standard Purchasing

DDP

Dannie Dock

Supplier

International Buying

Back to top