The incoterms what do they mean

That it can be a good business model to buy products from abroad and sell them on bol.com is beyond dispute. However, you could be in for some nasty surprises if you are not sufficiently aware of the obligations and responsibilities involved for you as a seller on bol.com.

Highlights from this blog:

• Record everything as best you can, even when you deviate from it;
• Differentiate between different types of transportation;
• Also, look carefully at your arrangements at DDP.

What are incoterms?
Fortunately, there is an international organization, the InternationalChamber of Commerce (ICC), which has established ICC Incoterms since 1936. These Incoterms allow you to lay down the obligations, risks and costs between you and the foreign supplier to cover part of the liability. Furthermore, these agreements cover transportation, insurance, permits and customs formalities. Incoterms are not laid down in laws or treaties, so it is important that you lay them down in advance (in black and white, for example in the form of an agreement) with the party you are going to do business with.

When the Incoterms are laid down correctly, there are clear agreements about what you as a seller are responsible for and where your responsibility ends. This helps ensure that you do not run into unforeseen obstacles in terms of risks, costs and obligations to the foreign supplier. So it's good to know more about this as a seller on bol.com! Another big advantage is that the ICC Incoterms are available in more than 30 languages, making it an accessible way to enter into a commercial relationship with a foreign party.

Renewal

Every ten years, Incoterms are renewed or updated. This year, on January 1, 2020, the ICC Incoterms 2020 were launched. This new list consists of 11 Incoterms from which you can choose together with the international trading partner. Since the Incoterms are not included in any law or treaty, you need to agree personally with your trading partner whether to use them. It is also possible to deviate from the Incoterms, but in that case be careful to record the agreements made clearly and in writing (black on white) in order to limit the risk of liability.

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The 11 Incoterms

To make it clear to you as a buyer (on the international market) what the various options are regarding the division of responsibility with respect to the foreign seller, the features of Incoterm are classified as follows:

- Delivery: The seller must make the goods available to the buyer at the agreed place of delivery on the agreed date.
- Transport risk: The risk of damage to or loss of the goods in transit.
- Transport costs: The cost from delivery
- Customs formalities: Arranging for and paying import duties
- Transport insurance: Arranging insurance for the goods
- Place of delivery: Defining where the transfer of the goods will take place.
This should be added to all forms of Incoterms.

In order to make the right choice between all the different forms of responsibility between you and the foreign supplier
the 11 different ICC Incoterms are listed below. In addition, make a good consideration that suits you and your trading partner.
For each form of transport you can choose from the following Incoterms.

1. EXW Ex Works.

As a buyer, you have the maximum obligations; the seller has the minimum obligations. The seller ensures that the goods can be picked up at his location on the agreed date. All other responsibility lies with the buyer.

• Delivery: The seller will have the goods ready at its own location on the agreed date for you, the buyer, to pick up. As the buyer, you must load the goods onto the means of transport.
• Transportation risk: Lies with the buyer as of delivery.
• Transportation costs: Entirely at the buyer's expense.
• Customs formalities: Full responsibility of the buyer.
• Transport insurance: Will not be taken out. For international transportation, this form (EXW) is not recommended.

2. FCA Free Carrier (Freight free to carrier).

The seller bears the cost of transporting the goods to the agreed pick-up location. The risk lies with the buyer at the time the goods are handed over to the first carrier.

• Delivery: The seller has the goods ready on the agreed date at the agreed location for you, the buyer, to pick up.
• Transportation risk: Lies with the buyer as of delivery.
• Transportation costs: Are from the pickup location at the buyer's expense; until delivery, the costs are at the seller's expense.
• Customs formalities: Full responsibility of the buyer.
• Transportation Insurance: Neither party is obligated to do so.

3. CPT Carriage Paid To.

The seller shall bear the cost of transporting the goods. The risks are for the buyer from the moment the goods are handed over to the first carrier.

• Delivery: The seller delivers the goods to the carrier.
• Transport risk: Lies with the buyer from the moment the goods are handed over to the first carrier. For delivery, it lies with the seller.
• Transportation costs: Are at the buyer's expense from the time the goods are handed over to the first carrier. The cost of transportation to the agreed location shall be borne by the seller.
• Customs formalities: Customs formalities belonging to export are the seller's responsibility, including costs, duties and taxes. Customs formalities belonging to transit and import are the responsibility of the buyer, including costs, duties and taxes.
• Transportation insurance: Does not need to be taken out by the seller for the goods.

4. CIP Carriage and Insurance Paid To

The seller shall bear the cost of transportation and insurance to the agreed location; from the time the goods are handed over to the first carrier, the cost of transportation and insurance shall be borne by the buyer. The seller is obliged to notify the
seller that the goods are in transit.

• Delivery: The seller delivers the goods to the carrier.
• Transport risk: Lies with the buyer from the moment the goods are handed over to the first carrier. For delivery, it lies with the seller.
• Transportation costs: Are from the moment the goods are handed over to the first carrier at the expense of the
• buyer. The cost of transportation to the agreed location is borne by the seller. So be aware that the transfer of risk for transportation damage occurs at a different time than the transfer of cost.
• Customs formalities: Customs formalities belonging to export are the seller's responsibility, including costs, duties and taxes. Customs formalities belonging to transit and import are the responsibility of the buyer, including costs, duties and taxes.
• Transportation Insurance: The seller shall take out this from the time of delivery to the time of destination.

5. DAP Delivered at Place .

The seller shall bear the cost of transportation to the agreed location, except for costs arising from importation. In addition, the seller bears all risks until the goods are ready to be unloaded by the buyer.

• Delivery: The seller makes the goods available, unloaded, on the buyer's means of transport at the agreed location
• Transportation risk: Are at the buyer's expense from the time the goods are delivered. The cost of transportation to the agreed location shall be borne by the seller.
• Transportation costs: Are to be borne by the buyer from the time the goods are delivered. The cost of transportation to the agreed location shall be borne by the seller.
• Customs formalities: Customs formalities belonging to export are the seller's responsibility, including costs, duties and taxes. Customs formalities belonging to transit and import are the responsibility of the buyer, including costs, duties and taxes.
• Transportation insurance: neither party is obligated to do so

6. DPU; Delivered at Place Unloaded

(Delivered at destination and
unloaded) All risks until the goods are unloaded at the agreed
location are for the seller.

• Delivery: The seller unloads the goods from the means of transport at the agreed location and makes them available to the buyer
• Transportation risk: Lies with the buyer from the time the goods are delivered to the agreed location. Before delivery, it lies with the seller.
• Transportation costs: Are to be borne by the buyer from the time the goods are unloaded, from the time of transit. The cost of transportation to the agreed location, including the cost of unloading, shall be borne by the seller.
• Customs formalities: Customs formalities belonging to export are the seller's responsibility, including costs, duties and taxes. Customs formalities belonging to transit and import are the responsibility of the buyer, including costs, duties and taxes.
• Transportation Insurance: Neither party is obligated to do so.
  

7. DDP Delivered Duty Paid

(Delivered duties paid)
As a buyer, you have the minimum obligations; the seller has the maximum obligations. The seller has responsibility over delivery of the goods to the agreed location in the buyer's country and bears all associated costs, including
import duties and taxes.

• Delivery: The seller makes the goods, unloaded, available on the means of transport at the agreed location to the buyer.
• Transport risk: Lies during transport until delivery on the means of transport at the agreed location with the seller.
• Transportation costs: Are to be borne by the seller until arrival at the agreed location.
• Customs Formalities: The customs formalities belonging to export, transit and import to the agreed location are the responsibility of the seller, including costs, duties, taxes and charges.
• Transportation Insurance: The seller is not required to purchase this.

8. FAS Free Alongside Ship

(Cargo free alongside ship)
In the agreed port, the seller places the goods alongside the ship; if the goods are transported in a container, the seller will transfer the goods in a terminal.

• Delivery: The seller shall deliver the goods alongside the agreed vessel, at the designated loading place and in the manner customary at that port.
• Transportation risk: Lies with the buyer from the moment of delivery. Before delivery, this risk lies with the seller.
• Transportation costs: Are until arriving at the agreed location at the seller's expense. Therefore, it is important to specify the point of loading as much as possible.
• Customs formalities: Customs formalities belonging to export are the seller's responsibility, including costs, duties and taxes. The customs formalities belonging to imports are the responsibility of the buyer, including costs, duties and taxes.
• Transportation insurance: neither party is obligated to do so
  

9. FOB Free On Board .

The seller loads the goods aboard the agreed vessel. The costs and risks lie with the buyer when the ship passes the railing.

• Delivery: The seller delivers the goods aboard the agreed vessel.
• Transportation risk: Lies with the buyer from the moment of delivery. Before delivery, this risk lies with the seller.
• Transportation costs: shall be borne by the buyer from delivery to the agreed location.
• Customs formalities: Customs formalities belonging to export are the seller's responsibility, including costs, duties and taxes. The customs formalities belonging to imports are the responsibility of the buyer, including costs, duties and taxes.
• Transportation Insurance: Neither party is obligated to do so.

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10. CRF Cost and Freight.

The seller shall bear the costs and freight until delivery of the goods at the agreed location. The risk is for the buyer from the moment the goods are loaded on the agreed vessel (have passed the railing).

• Delivery: The seller delivers the goods aboard the agreed vessel
• Transportation risk: Lies with the buyer from the moment of delivery. Before delivery, this risk lies with the seller.
• Transportation costs: Are payable by the buyer from delivery to the agreed location. Please be aware that the transfer of risk for transport damage occurs at a different time than the transfer of costs.
• Customs formalities: Customs formalities belonging to export are the seller's responsibility, including costs, duties and taxes. The customs formalities belonging to imports are the responsibility of the buyer, including costs, duties and taxes.
• Transportation insurance: neither party is obligated to do so

11. CIF Cost, Insurance and Freight.

(Cost, insurance and freight) This involves the same thing as CRF. The only difference is that
CIF does require the seller to purchase transportation insurance from the port of shipment to the port of destination.

So be clear about what are your obligations as a buyer, what are the seller's obligations, who takes care of the transport (and to where) and at what point the risks pass from one party to the other. Be extra vigilant when using DDP, as import duties (customs formalities) can vary from country to country .

Conclusion

When you decide to import products from abroad for resale in the Netherlands, it is important that you make clear arrangements with the supplier. These agreements need to be laid down clearly in an agreement. There are many things you need to take into account to avoid having to deal with unforeseen costs, risks, obligations and liability, among other things. By using one of the 11 established ICC Incoterms, you can accurately define the rights and obligations of both yourself and the seller. Of course it is possible to deviate from the Incoterms, but always be careful and precise in formulating and recording the agreements with the foreign manufacturer. It would be a shame if your bol.com business is affected by unclear agreements. After all, profit on your purchasing is profit on everything.