What are delivery terms?
Delivery terms can be explained as purchasing information about how a product should be delivered. Information that should be specified includes payment terms for shipping, customs and potentially import, and who is responsible for paying in case of damage.
Why are delivery terms needed?
There’s a lot to keep in mind when shipping goods, especially when it comes to contact with transporters, insurance companies and customs authorities. Both in Sweden and abroad.
That’s why the importance of delivery terms can’t be stressed enough, as they regulate the risk and cost division between seller and buyer in advance. By specifying who is responsible for what, you can prevent any unnecessary misunderstandings and conflicts.
To know what delivery terms could apply, you need to know about Incoterms® and the difference between various types of delivery terms. It’s even easier if you are a business client of PostNord and use Pre-Shipment/Booking to print delivery terms as well as labels.
The international term collection – Incoterms
As trade expands globally, so does the need for clear rules regarding shipping. To prevent misunderstandings and make it obvious who is responsible for what, there are a number of standardised terms that can be used as guidelines.
Behind some of these terms is the International Chamber of Commerce (ICC), whose collection of terms, called Incoterms®, are the most used in the world, and the most universally accepted. The Incoterms® standard rules apply regardless of mode of transport and look as follows:
- Delivered Duty Paid
Abbreviation: DDP
Seller’s responsibility: all costs until the product has been delivered - Delivered at Place
Abbreviation: DAP
Seller’s responsibility: delivery
Buyer’s responsibility: accepting products - Ex Works
Abbreviation: EXW
Seller’s responsibility: storage of goods
Buyer’s responsibility: all costs including pickup at the location of the seller - Free Carrier
Abbreviation: FCA
Seller’s responsibility: delivery
Buyer’s responsibility: transportation - Carriage and Insurance Paid to
Abbreviation: CIP
Seller’s responsibility: delivery to agreed location
Buyer’s responsibility: import - Delivered at Terminal
Abbreviation: DAT
Seller’s responsibility: sending the products
Buyer’s responsibility: collecting the delivery at the agreed terminal - Carriage Paid to
Abbreviation: CPT
Seller’s responsibility: export to agreed location
Buyer’s responsibility: import and insurance
A commonly used delivery term
Despite this collection of rules, it can still be difficult to know exactly what terms apply. The ICC standard terms can act as a template.
The delivery term of choice by many companies is called FCA, which stands for Free Carrier. The term means that the buyer will collect the goods at the location of the seller, which makes it easy to calculate costs for packaging, export declaration, insurance, and so on.
Deciding factors
Among the factors that should be decisive in the choice of delivery terms are the type of goods and method of shipping (container, bulk, etc.). As a seller, you should check what shipping terms are most advantageous to you by considering factors like who should pay for shipping, who is responsible for packaging and any damages, and so on.
Finally, the laws surrounding export and import must be followed to the letter, which makes it necessary to have all paperwork with required information in order.
