The Port of Shenzhen comprises several ports along the coastline of Shenzhen in Guangdong Province, China. Shenzhen is the tech capital of China, and if you are buying electronics and tech equipment, your supplier will choose to export through Shenzhen port. When importing from Shenzhen to the UK, you and your supplier should work with a clear contract setting out the payment and delivery terms you have agreed.
Using incoterms (International Commercial Terms) helps to lower the risk of misunderstandings and delivery mishaps. We have compiled this guide to help you understand all terms used in international shipping. Though FOB is the most common, there’s nothing wrong with having all bases covered. In this article, we talk about:
Incoterms (international commercial terms) provide the details of the :
EXW means that the seller will make the goods available for pick up at their warehouse. You are responsible for the transport cost to Shenzhen port and export clearance. Though EXW is very expensive, it comes with the assurance that your chosen freight forwarder will handle your goods throughout the entire process.
FOB means that the seller will ship the goods from his warehouse to Shenzhen port and handle all local transportation costs. Your responsibility begins once the goods arrive at Shenzhen port. You will handle the transport cost to the UK, import clearance, and inland transportation to your final destination.
The seller handles export clearance and delivers the goods to the agreed place of delivery (Shenzhen port). In turn, you are responsible for the goods once they reach the port and bear the cost of loading the cargo on the ship. If the seller’s warehouse is the agreed place of delivery, the seller will bear the cost of loading to the carrier.
The seller delivers the goods to the ship’s side at Shenzhen port, assumes all risk, and clears the goods for export. You handle all costs from that point on, including the cost of loading the goods.
The seller pays for the shipping of goods to the UK port of your choice. Liability and ownership of the goods is transferred to you once the goods arrive in the UK. You will bear the cost of unloading the vessel and inland transport to your location. Even though your seller will handle export clearance and freight costs, you will still assume the risk and insurance during transit from Shenzhen to the UK.
The seller handles the shipping cost to your port of choice in the UK. However, the seller hands over the risk to you once the goods are loaded onto the ship at Shenzhen port. CFR is similar to CPT except that CFR only applies to water-based transport.
CIP is similar to CPT except for one key difference. The seller will cover insurance for the goods during transit for any mode of transport. Once the local carrier hands over the goods at Shenzhen port, the seller hands over the risk to you (while still handling insurance) until the goods are unloaded at your chosen UK port.
The seller bears the shipping cost from Shenzhen to the UK, assumes all risk, and pays for insurance of the goods until they arrive. The seller is responsible for clearing customs, and you are responsible for paying the duty. CIF is the same CIP, except CIF is specifically for water-based transport.
The exporter/seller delivers the goods to a UK port of your choice and covers the unloading costs. From that point, you are responsible for the cost and risk of the goods. The seller bears all risks and costs associated with the cargo until it reaches the UK. Once the goods arrive, you bear the cost of import clearance and inland transportation to your location.
The seller delivers the goods to your final destination in the UK and assumes all risks associated with the shipping and loading costs. You bear the unloading and import clearance costs.
DDP means that the seller pays for and is responsible for everything. You are only responsible for unloading the goods once they arrive at your final destination. DDP is the easiest for the buyer but often very expensive. That’s because the goods ship with the seller’s chosen shipping company, which might not be the cheapest. Before settling on DDP terms, compare the cost with the seller’s FOB quote and a shipping quote from an expert freight forwarder.