International Shipping & Freight Forwarding Blog

Some of the most crucial elements of your shipment, regardless of whether it is a domestic or international shipment, are the freight terms used to describe how it is handled.

As important as it is, I find that this knowledge is often overlooked and dismissed, often leading to catastrophe for the buyer. So, today I thought I would compare and contrast two of my favorite incoterms to help you determine which is right for your shipment as well as understand the risk and responsibility hand-off.

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 Importing and exporting goods internationally can be tricky, especially if you have little to no experience. The process gets even more complex as the size of your shipment grows.

To effectively ship your goods overseas, you must be sure that everything is in order from packaging to paperwork, or you might just find yourself dealing with the issue of delayed or even damaged goods. Working with an export partner, like an international freight forwarder, can help save you the stress of worrying about whether your shipment will arrive on time and intact.

Here are the top reasons why working with a freight forwarder can make your shipping experience a smooth one. 

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When you’re shipping goods either domestically or internationally, you’ve probably noticed that shipping companies and freight forwarders use a lot of freight terms that might seem foreign to you. Regardless of how valuable or large your shipment is, it is important for you to know exactly what these terms mean as they are often integral to the shipping process or liability of your shipment.

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Don't lose your entire shipment over 3 little letters!

If shipping was not complex enough with customs, federal maritime commission, tariff filing, and transportation security administration regulations, we are CONSTANTLY stepping into pre-existing situations where lack of clarity in responsibilities between shipper and buyer are creating problems so major, that entire shipments are being abandoned.

This is exactly the choice a recent military base client of ours is facing. Somebody in the chain wasn't knowledgeable about who is responsible for costs related to delays from customs, and when a random intensive exam was assigned to them, all hell broke loose.

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Labels are important... in shipping:

There are a lot of different ways your freight can be handled from one stop to the next. Some important things to think about are risk, ownership, and responsibilities... They all transfer from seller to buyer at some point, but where and when it occurs can vary widely depending on the preferences of the parties involved, the type of cargo you're transporting, how far it's going, and how many borders it's crossing.

But there is one method that I prefer to use above all else for about 80% of our shipments. It's known as Incoterm FCA, or Free Carrier, and it's for good reason.

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What's an FOB? Or a CIF for that matter?

When shipping to or from an overseas country, you need to understand the proper purchase & freight terms dictating costs and responsibilities. After all, who likes dealing with unexpected costs, or worse, disasters associated with misunderstandings and incorrect interpretations? Obviously, nobody, but with international freight, you're dealing with other countries, which means different customs, different languages, and different expectations - all of which will impact your shipments.

In one of my recent posts, I outlined a project that we took on after the shipper painted himself into a corner by not having his basis covered before putting all of his belongings in a container heading for Germany. (read more about it HERE)

The point I always try to express is that we want to start off on the right foot, because there are things we can't control, like customs inspections, labor issues, or other political, economic, or environmental challenges - and I would rather help you navigate through those, rather than things that could have been avoided if a little more care were taken in the planning process.

Terms are so important when working with foreign entities where language and cultural barriers may exist, so I've put together something that will take the mystery out of the shipping process for those of you who are concerned about protecting your investment and knowing your responsibilities - Your 2010 Incoterms:

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