Question

If you sell a Chinese product The HUAWEI Phone in Germany, what kind of INCOTERMS will you use and Why?

Answer 1

International Commercial Terms (Inco-terms) are the freight, shipping and trade terms used in international trade. These terms or standards determine the transportation of commodities from a shipping country to destination country. Usually incoterms are commercial terms defined by International Chamber of Commerce (ICC) for shipment of goods in international market. If chinese HUAWEi phones are being shipped to Germany, then we should use freight terms i.e., CIF and CIP. CIF refers to carriage, freight and insurance costs paid by an exporter at destination port of the importing country i.e., Germany in this case. CIP refers to carriage and insurance costs paid by the exporter to ship the consignments at destination place in the importing country. Both CIP and CIF are paid by exporters after arrival of shipped item such Chinese HUWAEi phones in Germany Both incoterms are applicable If HUWAEi phones are shipped from China to Germany via Sea and Inland Waterway. If shipment is sent via Airway then ecoterms such as EXW is broadly use that puts maximum cost liability on importers and seller has to incur minimum expenses including carriage and insurance expenses to ship the consignments from seller's stockyard/go-down to destination location of an importing country. The cost of exporter includes packaging cost of items, custom clearance duties, transportation costs of sending the items from seller's location to airports or sea ports via rail, road or waterways. The costs of importer includes shipment handling costs at destination port, transportation of received consignment from destination port to final destination via rail or road route. Usually bulk consignment such as engineering machinery and heavy duty items are shipped through sea and inland waterway but light items such as HUWAEi phones can also be shipped via airways to destination location.