Need to Know the Shipping Terms Properly in this Scenario

If you are new to shipping terms in Australia or unaware of the trading process, then this blog will be the ultimate guide for you. The shipping rules are made to make next day delivery in Australia easier and legal. 

Regular updates have been made in 1953, 1967, 1976, 1980, 1990, 2000 and 2010 for keeping all the terms current. These terms eliminate the uncertainty of interpretation. The International Chamber of Commerce had published a set of rules known as Incoterms to avoid the chances of confusion. 

The current version of Incoterms are as follows: 

Ex Works or EXW

EXW places the maximum obligation on the buyer and the obligation is minimal on the seller. The Ex-Work is used for making an initial quotation on the sale of a good without a single cost included. 

There is no such obligation for the seller, they are free to make a contract of carriage. But there is also no such obligation for buyers either. The buyers are allowed to sell goods to their customers for collection from the actual seller’s warehouse. However, the buyer arranges the collection of freight from the location. The buyer is also responsible for clearing out the goods. Not only this, but a buyer is also responsible for completing all the export documentation. Here, the seller does not have any obligation to collect information or documents at the buyer’s cost.

FCA (Free Carrier)

Here, the seller delivers the goods and clears them for export at a particular place. The goods are delivered to a carrier nominated by the buyer or even to any other party. This incoterm has replaced FOB in many respects for modern usage. The critical point includes the risk of moving from the loaded cargo to the destined place. It should be noted the place chosen for delivery affects the obligation of loading and unloading the packages or parcels at that place. 

The seller is responsible for the loading of any goods on the buyer’s carrier if the delivery takes place at the seller’s premises. And, if the delivery takes place at some other location, the seller has to deliver the goods after the transport has arrived at that particular place. 

CPT (Carriage Paid To)

CPT has replaced the Cost and Freight (C & F) and CFR terms for all the modes of shipping. The seller pays for the carriage of goods until it reaches the destination. The goods are delivered only when it is handed to the main carrier during the shipment. The seller is also responsible for the origin of the cost including export clearance and freight cost to the destined location. This has to be agreed upon by both the seller and the buyer for obtaining insurance. 

Summing up

These are some shipping terms that an organization must need to know for next day delivery in Australia. A small misunderstanding may lead to bigger disputes related to overseas freight and shipment of goods.