Incoterms for USA and Canada - Shipping to or from North America

In the complex world of global trade, there is much to consider and decide. Before choosing your logistics partner, buyers and sellers must agree on the terms of trade about both the movement and the transfer of ownership of purchased goods. Incoterms® is a globally recognized set of rules designed to help bring order to this multifaceted process.

1. Overview of Incoterms

Incoterms, or International Commercial Terms, are a set of pre-defined trade terms published by the International Chamber of Commerce (ICC). These terms are widely used in international sales contracts to clarify the responsibilities and obligations of both the buyer and the seller in regards to delivery, risk transfer, costs, and other aspects of the transaction.

2. Importance for North America

When shipping to or from North America, specifically the United States and Canada, Incoterms play a crucial role in ensuring clarity and consistency in trade transactions. These terms help businesses from different countries understand their responsibilities and ensure that contracts are enforceable.

3. Key Incoterms for USA and Canada

a.  FOB (Free On Board) : This term indicates that the seller delivers the goods on board the vessel named by the buyer at the named port of shipment. The risk and cost of loss or damage to the goods, as well as any additional costs, pass to the buyer once the goods are on board.

b.  CIF (Cost, Insurance, and Freight) : In this term, the seller delivers the goods to the named port of destination, cleared for import, and pays the costs and freight necessary to bring the goods there. The seller also contracts for insurance covering the buyer's risk of loss or damage to the goods during the transportation.

c.  EXW (Ex Works) : This term indicates that the seller makes the goods available at their own premises (works, factory, warehouse, etc.) for pick-up by the buyer. The buyer is responsible for all costs and risks involved in transporting the goods from that point.

d.  DDP (Delivered Duty Paid) : In this term, the seller delivers the goods to the named place of destination in the country of importation, where the goods are imported cleared for importation and all risks and costs, including duties, taxes, and other charges, are borne by the seller.

4. Considerations for Shipping to/from North America

When shipping to or from North America, it's important to consider the specific Incoterms that are commonly used in the region. Additionally, factors such as customs clearance, duties, taxes, and transportation logistics should be taken into account. Understanding these Incoterms and their applications can help businesses avoid misunderstandings and disputes, ensuring smooth and efficient transactions.

5. Conclusion

Incorporating Incoterms into contracts when shipping to or from North America is crucial for ensuring clarity, predictability, and compliance with international trade regulations. By understanding and adhering to these terms, businesses can mitigate risks, reduce disputes, and facilitate successful transactions in the global marketplace.