Incoterms Explained For Importing To Australia

By Author: Belinda Darling
Total Articles: 152
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Terms without borders for trade beyond borders

With any sort of cross cultural exchange, there comes tension. Any time that two people do business, under two different sets of laws, with two different currencies and two different cultural bases for understanding relationships, there is bound to be tension. We see it worldwide on the internet every day! However, with the enormous importance of smooth, strong and profitable trade relationships to a national economy, the cross-border exchange of commercial goods has become very well regulated. Now, when importing to Australia through a Melbourne customs broker, a set of standard international commercial terms are used - Incoterms for short. Today we check out what some of the different incoterms mean for those trying to get goods through customs clearance.

CFR - Cost and Freight
If you are importing to Australia under the CFR incoterm, the seller is responsible for all costs related to placing the goods on the ship. They'll pay their own customs clearance, cost of overseas freight and any other charges. The CFR-Landed incoterm means that the seller will ...
... also pay unloading costs after importing to Australia, if these are part of the ship's contract of carriage.

Delivery method: Seller arranges to place goods on vessel and buyer arranges to collect from vessel.

Transfer of risk: Is the moment the goods pass over the ship's rail.

CIF - Cost, Insurance and Freight
This incoterm for importing to Australia means that the seller pays carriage, customs clearance at the point of origin and other charges, and also pays for insurance when aboard the vessel.

Delivery method: Seller arranges to place goods on vessel and buyer arranges to collect from vessel.

Transfer of risk: Is the moment the goods pass over the ship's rail.

DAT - Delivered at Terminal
This incoterm replaces DAF, DES, DEQ and DDU from the 2000 Incoterms. Seller pays all costs until goods arrive at named delivery place. The new DAP Incoterm is very similar, but goods are unloaded by the seller.

Delivery method: Seller arranges to deliver goods at the buyer's disposal unloaded from an arriving vehicle.

Transfer of risk: When the goods arrive at the delivery point, prior to unloading for DAP; after unloading for DAT.

EXW - Ex Works
The buyer pays all costs of delivery, customs clearance at both countries from the seller's premises boundary to their own boundary.

Delivery method: Up to the buyer - you'll need a customs broker Melbourne and a freight forwarder.

Transfer of risk: Boundary of seller's premises.

FCA - Free Carrier
Under this Incoterm for importing to Australia, the seller pays all costs until the goods are delivered to the carrier.

Delivery method: Seller arranges customs clearance and delivers to the transport company.

Transfer of risk: Either when goods are loaded onto the truck or at the freight forwarder's depot before unloading.

DDP - Delivered Duty Paid
Use of this Incoterm may be cost effective for importing to Australia if customs clearance is cheaper in your goods country of origin. Under this term, the seller pays all costs until the goods are delivered.

Delivery method: Seller delivers to an arranged destination, but doesn't arrange for unloading.

Transfer of risk: At the named place, before unloading.

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