INCOTERMS – INTERNATIONAL COMMERCIAL TERMS
The word Incoterms stands for International Commercial Terms, issued by International Chamber of Commerce. Incoterms are standardized terms of delivery between sellers and buyers. Currently there are 11 Incoterms. These set out standard terms of sellers and buyers’ responsibilities and risks, so the agreement just mentions the Incoterm and does not have to provide the details about how and where the cargo will be delivered.
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Incoterm code Description of seller’s responsibility to Deliver
EXW EX Works…named place
FCA Free Carrier…named place
FAS Free Alongside Ship…named port of shipment
FOB Free On Board…named port of shipment
CFR Cost and Freight …named port of destination
CPT Carriage Paid To… named port of destination
CIF Cost, Insurance, Freight…named port of destination
CIP Carriage and Insurance Paid to…named place of destination
DAT Delivered At Terminal… Named port of destination
DAP Delivered at Place …named port of destination
DDU Delivered Duty Unpaid…named place of destination
DDP Delivered Duty Paid…named place of destination
It depends on whether you are a buyer or seller, together with a few other factors. For the seller, the lowest risk, responsibility and cost to deliver is the Incoterm ExW (Ex Works) but for the buyer, DDP (Delivered Duty Paid) has the lowest risk, responsibility and cost to take over the cargo and take it to their warehouse. But it is not correct to assume that ExW will be the best delivery term for the seller, and DDP for the buyer.
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Yes, it is fine to add extra words to an Incoterm, to provide more precise information. For example; FOB, un-stowed; DDP, VAT Paid; ExW, Loaded, etc. It is important to note that more precision can be added to the Incoterm, and nothing else that changes the very nature of Incoterm.
Yes, Incoterms can be use in domestic transactions where both buyer and seller are residing in the same country, or same customs union, such as European Union. More precision can be added, wherever it is considered necessary.
An international freight forwarder is a firm that specializes in arranging the transfer of the cargo from the exporter’s warehouse right down to the importer’s warehouse across the border. The entire cargo transit may, but not necessarily, comprise any combination of road, rail, air and ocean. The freight forwarder used may be based in the exporter or the importer’s country and may use its own offices or hire a partner agent in the other country to complete the cargo journey. The freight forwarder provides cost-effective and efficient cargo shipping solutions based on the customer’s requirement that includes processing all relevant shipping documents, and arranges the distribution or “forwarding” of the cargo as per the instructions of their client. It is failiar with all relevant border cargo movements.
Freight forwarders are defined as experts connected within the supply chain who concentrate on the logistics and physical transportation of cargo. They are in touch with any entity in the exporting process who handles or is aware of a shipment moving via truck, boat, plane or a combination thereof. Freight forwarders are in charge of assembling and completing a variety of documentation and compliance filings.
If a freight forwarder is not a licensed Customs Broker, it will need to hire one to get the goods cleared from the customs at the sea or air ports of arrival or departure, or both.
There are many small outfits working as freight forwarders in USA and many other countries. Most of them do not have their own licenses and are often not able to provide their own House Bill of Lading (HBL). A licensed freight forwarder can provide its own HBL, and a real, full service licensed freight forwarder will be able to provide all cargo information to their customers within minutes. Apart from IATA membership, in the United States NVOCC (Non Vessel Operating Common Carrier), is the key license for a freight forwarder.
TEU Global is an independent, United States based, ISO certified, NVOCC, IATA and FMC licensed, international freight forwarder that offers reliability and consistency at the most competitive rates. TEU Global is a member of World Cargo Alliance that is the world’s largest and most powerful freight forwarder network. It takes full responsibility from origin to destination, providing 100% visibility to the client across the entire global supply chain. With numerous agent relationships across many countries and space-volume bookings with major shipping lines, TEU Global develops and implements logistic strategies that work in their customers’ best interest. Their teams are experienced in multiple industries, providing customized solutions to their customers.
Countries have their own legislations but generally speaking, customs clearance involves submitting all required documents in respect of the cargo, either physically or electronically, to the Country’s customs organization. These documents and other data is utilized by the Customs Department to determine the duties and taxes to be levied on the cargo, and to see if the cargo needs to be examined for possible under-invoicing, or carrying any illegal stuff, including terrorism related materials. Only licensed customs brokers are allowed to submit the documents. Call TEU Global and learn more about their reliable and cost competitive customs brokerage services.
A licensed customs broker or agent is a firm that has the accreditation from customs and other government authorities and skills to take care of the customs clearance aspect of the business themselves. Every country has its own regulatory customs requirements. It has knowledge about HS and HTSUS Codes and calculations of Duties and Taxes and to present all complete relevant documents at customs. A good customs broker or agent will be able to get customs clearance with maximum possible speed and efficiency, avoiding all penalties for delayed, incomplete and inaccurately filled documentation. Call TEU Global and learn more about their reliable and cost competitive customs brokerage services.
Smart licensed customs brokers or agents are those that help the importers and exporters to perfect their cargo related documents for submission to the customs authorities, and determine the exact duties and taxes that will be levied on the cargo. They will also submit the documents to the customs authorities in time and in the most suitable manner, and finally they would follow up with the customs authorities to provide any further information without losing much time, so that the cargo is released in the shortest possible time. Call TEU Global and learn more about their reliable and cost competitive customs brokerage services.
For any cargo imported into USA, US Customs & Border Patrol (CBP) must know who is legally responsible to pay import duties, taxes, fees and penalties (if any) for the cargo. For this reason, amongst all the documents that are filed with CBP, one important one is the party that will act as the Importer of Record, which could be the overseas shipper (exporter), the consignee (importer), or a Customs Broker. Call TEU Global and learn more about this aspect related with importing cargo into the United States.
These include supporting documentation for all initial assessments of the imported cargo. When the Importer of Record is not located on the site at the time of import, it is required to appoint a person or firm having a valid Power of Attorney to act on his behalf, for the accountability of the imported cargo. Call TEU Global and learn more about this aspect related with importing cargo into the United States.
When the shipper or the consignee get the message that their shipment is on customs hold, it is a bad news. It means that the shipment has most likely been held by customs for either some information is not provided in the shipping documents or the information provided is wrong, or some taxes or duties have not been paid. There are also chances that the cargo has been put on Customs Hold for a more thorough examination that is sometimes beyond control of the shipper. Call TEU Global and we will guide you about preparing your shipping documents in a manner that greatly reduces the chances of your shipments getting stuck on Customs Hold.
When a particular shipment is put on Hold by the customs for examination purposes, it can take longer for the shipment to be released and in all likelihood, there will be additional costs to be incurred by the shipper or the consignee. Call TEU Global and we will explain what it means for your shipment and what possible delays and additional costs you might be looking at.
Customs and Border Patrol (CBP) has its own algorithm that enables the organization to determine which specific shipments need to be examined. For a good reason, this algorithm is not exactly known to anybody except CBP because if it were, it would become easier to avoid customs examination and penalties for illegal or misdeclared shipments. That said, smart Custom Brokers like TEU Global know how shippers and consignees can minimize chances of custom’s selecting perfectly legal and accurately valued shipments for thorough examination. Call TEU Global and we will assist you in this respect.
There are three types of examinations by CBP, namely Non-Intrusive Inspection, Tail Gate Exam and Intensive Exam. Non-intrusive Inspection takes 2 to 3 days, Tail Gate exam takes 4 to 5 days, and the Intensive Exam can take up to a month with several thousand dollars in fees. Call TEU Global and we will be glad to explain the process to you.
An Import Customs Bond is a kind of financial guarantee or Insurance submitted by the Importer of Record to the Customs and Border Patrol (CBP) that duties, taxes, fees and penalties will be paid to the latter, when required. Import Customs Bond is an agreement between three parties, namely; the Insurance/Surety Company issuing the Import Customs Bond (Called Surety), Importer of Record (Principal), and Customs & Border Protection (The Beneficiary). As per the regulations, CBP requires all Importers of Record to file an Activity Code 1 – Import Bond in order to clear their entries, even if the goods are duty free. The Customs Import Bond guarantees CBP will collect all import duties, taxes, fines, or penalties from the importer, or if the importer cannot pay, the Insurance/Surety Company who issued the bond will pay on his behalf. Call TEU Global and we will explain the details.
Customs and Border Patrol (CBP) requires Import Customs Bond from the Importer of Record, when the imports are for commercial use and valued at 2,500 dollars or over. Import Customs Bonds are also required to meet Federal regulations. There are many insurance companies that provide or issue Import Customs Bonds and the only difference in purchasing a bond from one issuer to another is the financial strength of the issuer. TEU issues Import Customs Bonds directly from insurance companies with very high S&P ratings which have been operating well over 100 years. This ensures dependable financial support to all Import Customs Bonds issued by TEU. Call TEU Global and we will be happy to guide you about the Import Customs Bond and also arrange exactly the one that meets the requirement.
There are two types of Import Customs Bond – Single Entry Bond that covers the one time entry of imported goods, and Continuous Bond that covers the import of goods for one year and is renewed annually. Many importers find the continuous bond better in many respects, but call TEU Global and we will be glad to assist you in finding the best solution for your import needs.
A Continuous Import Bond is good at any U.S. port and can be used by any Customs Broker or Freight Forwarder to clear entries. When a bond is placed, CBP issues it a unique bond number, tying the bond to the company’s Importer Number/Tax ID. The Customs Broker or Freight Forwarder files the import documents, providing the bond number upon entry. The Continuous Import Bond remains on file as a policy of the surety and there is no ownership of the bond by a third party, regardless of where the bond is purchased. Call TEU Global and we will answer your specific query.
The application process for an Import Customs Bond with TEU is simple. All TEU requires is an officer of the company to fill out and sign a one-page application and a power of attorney form. From that point, TEU’s underwriting team will evaluate the account and may request additional documentation for approval.
Once approved, the bond will be filed with CBP prior to the current bond’s effective date (if a bond for the previous year was already in place). The bond’s new effective date will remain unchanged, ensuring there will be no lapse in coverage. TEU issues the Import Customs Bond in accordance with CBP requirements and will promptly deal with any necessary changes at no additional charge. Call TEU Global and we will be glad to assist you.
The Importer Security Filing (ISF) regulation requires submission of an electronic ISF to U.S. Customs (10 data elements by importers, plus 2 by carriers) 24 hours before shipment loading at the origin. Enforcement of the regulation, which began January 26, 2010, may result in stiff penalties for non-compliance ($5,000 per incident, plus cargo delays). TEU offers integrated ISF services to ensure you meet the new requirements and that your shipments arrive on time, without delay.
Untreated wood carry the risk of bringing plant pests into US that can damage agriculture and both natural and cultivated forest resources of the United States. The US Department of Agriculture (USDA) have issued regulations that call for treating the Wood Packaging Materials before these are imported into the country. This prescribed treatment greatly reduces the risk of unwanted plant pests. Please call TEU Global and we will clarify the issue.
The regulations cover Solid Wood Packaging Materials, such as pallets, crates, boxes, and pieces of wood used to support or brace cargo. Wood packaging material is defined as wood or wood products (excluding paper products) used for supporting, protecting, or carrying cargo, including, but not limited to, dunnage, crating, pallets, packing blocks, drums, cases, or skids. The definition excludes manufactured wood materials, loose wood packing materials, and wood pieces less than 6mm thick in any dimension. Please call TEU Global and we will clarify the issue.
There are two treatment options: heat treatment or fumigation with methyl bromide. For heat treatment, WPM must be heat treated to achieve a minimum wood core temperature of 56°C for a minimum of 30 minutes. For fumigation, the WPM must be fumigated with methyl bromide in an enclosed area for at least 16 hours at the regulated dosage and then must be aerated to reduce the concentration of fumigant below hazardous exposure levels. After the wood is treated, it is stamped or branded with the internationally recognized IPPC mark. The treatment method used and country of origin of WPM is additionally indicated by the mark. Please call TEU Global and we will clarify the issue.
The Federal Drugs Authority of the United States regulates a wide range of products, including foods (except for aspects of some meat, poultry and egg products, which are regulated by the U.S. Department of Agriculture); human and veterinary drugs; vaccines and other biological products; medical devices intended for human use; radiation-emitting electronic products; cosmetics; dietary supplements, and tobacco products. Please call TEU Global and we will address your specific query.
There are basically two types or categories of exams, namely; CET Exam and MET Exam. CET Exam is done by the Contraband Examination Team (CET) of the US Customs and Border Patrol (CBP). MET Exam is about merchandise compliance that is carried out by CBP’s Manifest Examination Team. Apart from CET and MET Exams, there are Air Cargo Exams too; International arrival airports in the US have CBP teams who carry out safety and compliance inspections. Please call TEU Global and we will address your specific query.
Although the cost varies from a few hundred to several thousand dollars, the true cost is higher considering the tame lag and lost sales opportunities while goods wait for the examination. Generally, exam costs are the responsibility of the importer with some exceptions for air cargo. Because exams are conducted at Exam Sites owned by private contractors, there is no uniform set tariff of charges. TEU Global advises and implements different security strategies that save our clients in costs as well as valuable time.
To avoid the risk of your cargos getting selected for CBP Examinations, here is a list of measures that importers can take:
Timely filing of ISF
Clear and correct description of goods
Being members of CTPAT program
Known importer program
Having a professional brokerage firm review data submission for accuracy
Avoiding carriers and lanes that require transloading of goods before arrival in the US
TEU Global advises and implements different security strategies that save our clients in costs as well as valuable time.
What is meant by Counterfeit Products that cannot be imported into USA?
Products that are considered counterfeit by the US Customs and Border Patrol are those that “copy or simulate” registered trademarks owned by United States citizens or corporations. The CBP is authorized to exclude infringing merchandise from the Customs territory of the United States, seize it and forfeit it. It is a controversial subject which has prompted substantial recent litigation. The Court decisions have prompted frequent changes in Customs’ trademark enforcement regulations and policies. Please call TEU Global for more current details on this complex subject.
US Customs and Border Patrol (CBP) is not obligated to initiate enforcement action in every case of suspected infringement. If CBP does not initiate enforcement, even then the trademark owner in the US can initiate private actions for trademark infringement. In many cases they can obtain court injunctions directing Customs to exclude goods which infringe a recorded trademark. Please call TEU Global for more current details on this complex subject.
US Customs and Border Patrol (CBP) has the authority to seize and detain “counterfeit” merchandise, even if the trademark borne on such merchandise has not been recorded with the agency for import protection. Please call TEU Global for more current details on this complex subject.
BILL OF LANDING
A bill of lading (BL) is a legal document issued by a carrier (Ocean Vessel, airplane, Trucking Company) to a shipper (the one sending the goods). BL details the type, quantity, destination and consignee (the one who is authorized to receive) of the goods being carried, and also serves as a shipment receipt when the carrier delivers the goods at a predetermined destination. A copy of this document stays with the shipper, another is sent to the consignee and yet another must accompany the shipped products, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper, and receiver.
After receiving the cargo, a Master bill of lading (MBL) is issued by the carrier (Ocean Vessel, airplane, Trucking Company), whereas a House Bill of Lading (HBL) is issued by the Freight Forwarder. Whether HBL or MBL is required by the shipper, depends on the shipper’s arrangement with the consignee, freight forwarder, and the banks in the exporting and importing countries.
VERIFIED GROSS MASS
Misdeclaration of cargo weight is a major hazard which often results in cargo claims, structural damages to vessels and also poses a significant risk to the lives of staff. The International Maritime Organization (IMO) has amended the SOLAS (Safety of Life at Sea) convention that mandates the declaration of the Verified Gross Mass (VGM) of a packed container before loading on board vessels within a prescribed cut-off date / time to the shipping line and / or port terminal authorities. The regulation stipulates that either the container is weighed after it has been completely packed and sealed, or all packages and cargo items may be weighed individually (including the mass of pallets, dunnage and other packing and securing material) and must be added to the tare of the container visible on the exterior of the container.
The transit time of an ocean shipment depends on the port of departure and the port of arrival. Vessel sailings are regularly scheduled, and freight forwarders can always provide you with the estimated dates of departure and arrival of vessels. TEU Global has volume-space bookings with major shipping lines and we provide the most competitive shipping rates at any given time.
Containerized shipping is a very common method for expediting the movement of household goods and commercial products. Your commercial products or household goods are loaded into a protective steel container similar to a semi-truck trailer (without wheels). The container is loaded onto an ocean-going vessel. Upon arrival, the container can be loaded onto a trailer for delivery to your final destination.
Standard containers come in two sizes: 20-foot and 40-foot in length. The 20-foot container can hold approximately 1050 cubic feet (the contents of a one-bedroom apartment). The 40′ container can hold approximately 2100 cubic feet. Specialized containers (hi-cube, refrigerated, open-top, etc.) are also available. Please contact TEU Global for more details and how we can serve you.
All household goods should be securely packed in corrugated cardboard boxes. All commercial products should be securely packed in corrugated cardboard boxes and/or palletized. A container will be delivered to your location for loading. Upon completion of loading, the container will be sealed and delivered to the US loading port. Call TEU Global and we will provide you the best solution at the most competitive rates.
“Less than container load” is a shipping term referring to the quantity of personal effects or commercial product being shipped that would not be enough to fill a standard 20-foot ocean shipping container. Call TEU Global and we will provide you the best solution at the most competitive rates.
TEU Global offers alternatives to coincide with both your schedule and your budget. Air shipments will generally arrive to their destination within one week of the cargo pickup or delivery. Call TEU Global and we will provide you the best solution at the most competitive rates.
It is always advisable to get overseas shipments insured. TEU Global will obtain the most suitable marine insurance coverage for your shipments upon request. Due to the low cost of marine insurance, TEU recommends obtaining All Risk coverage. Call TEU Global and we will provide you the best solution at the most competitive rates.
Apart from duties and taxes, there will be port handling charges upon arrival at the destination port. These charges cover terminal handling/off-loading and documentation fees for your shipments. TEU can provide you with contact information for clearing agents at each destination to prepare you with this information ahead of time. Call TEU Global and we will provide you the best solution at the most competitive rates.
The ISF will need to be updated if the shipment is sold in transit. At a minimum, the ISF importer must notify CBP that the goods have been sold, and the party must update the Buyer (Owner) field and any other field that the party knows has changed as a result of the sale. Deleting the original ISF and replacing it with a new ISF while the shipment is on the water will expose the ISF importer to liquidated damages for a late filing. It is best to update the original ISF with the new information. The ISF importer remains liable for the timing and accuracy of the ISF filing. Call TEU Global and we will provide you the best solution at the most competitive rates.
IMPORT AND EXPORT
For exporter: A license is not required to export goods from USA; however, a permit is required for some goods. The export of goods from USA is controlled by laws and Government policies to prohibit the export of certain goods either absolutely or conditionally, and adequately record USA’s international trade.
For importer: Whilst there is no general license required for importing into USA, US CBP will need to clear your goods on import. You will need to know what import permits, quarantine permits, and treatments apply to your specific category and type of imported goods, and whether they are subject to mandatory safety or information standards. If you don’t follow the correct steps and regulations, you will risk breaking the law and not receiving your imports. Call TEU Global and we will provide you all the details you need to know.
A Certificate of Origin is often required to export certain goods, for customs clearance at the port of delivery and as stipulated in a letter of credit.
The Certificate of Origin is used for customs clearance at the destination. Certificates of Origin can also be requested by the overseas buyer or the business receiving your goods and in some instance the company receiving the goods will require a Certificate of Origin before authorizing their bank to issue a letter of credit and thus payment. In accordance with some free trade agreements, Certificates of Origin are required as part of the application for preferential tariffs.
A Shipper’s Letter of Instruction (SLI) is an important legal document/contract created between the shipper and the freight forwarder that is organizing the export and logistics for your shipment. It is a detailed document used in import/export and International trade to provide all details relating to your export shipment. A Forwarding Instruction is a similar document that the shipper completes and sends directly to the shipping line if they are not dealing with a freight forwarder. The SLI is a detailed document which gives your freight forwarder all specific instructions relating to the export of your goods. The freight forwarder will use the Shipper’s Letter of Instruction to correctly arrange the transport of your cargo. Call TEU Global and we will provide you all the information you need.
While itemization is not required for household goods, it is recommended that a general list with item valuation be provided. Packing lists showing unit quantities and value are needed for commercial product shipments. The above documents are needed to expedite export clearance and will be returned upon completion of the U.S. Customs export clearance verification. Call TEU Global and we will provide you all the information you need.
DUTIES AND TAXES
This depends on the destination country, your residence status and employment status. TEU recommends contacting the embassy commercial office for the country of destination for current rate information. We can also refer you to a shipping agent at your destination to prepare you for the importing process.
FAQs ABOUT TEU GLOBAL SERVICES
While TEU Global has offices in New Jersey, Miami and Los Angeles, it offers nationwide coverage across the United States, with extended readiness. Please call us and we will be happy to serve you in the best possible manner.
Yes, we can facilitate door-to-door pickup and delivery, to and from anywhere in the world. Please contact us and we will be happy to provide you our best rates and range of logistics services.
TEU Global is a licensed international freight forwarder and Customs broker. We are licensed by the Federal Maritime Commission, a United States Government agency. TEU is also a licensed Non-Vessel Operating Common Carrier (NVOCC), which enables us to offer bulk shipping prices to all our clients regardless of your shipping volume.
Yes, TEU handles upon arrival, local Customs clearance, local port charges, and import documentation. TEU also provide additional services at your request, including delivery of cargo to your final destination. Even before booking a shipment, we recommend contacting us to ensure you are prepared for your shipment’s arrival.
Please contact 732-515-9040 or email at email@example.com for more information.
Trade Expeditors USA, Inc. DBA TEU Global
242 Old New Brunswick Road, Suite 145,
Piscataway NJ 08854
Main: 732 515 9040 | Fax: 732 856 5008