Some key considerations, when it comes to customs responsibilities;
- EXW – the seller is responsible for providing documentation to facilitate the export process, but the buyer is responsible for the export process and subsequent import processes.
- The seller is responsible for the export process with all other Incoterms
- DDP – the seller is responsible for completing all import formalities, including duties and fees. This is commonly used for eCommerce shipments, so that the receiver is not hit with additional charges on receipt of the goods.
- The buyer is responsible for import formalities with all other incoterms
Variations to these Incoterms can be agreed and documented between the parties. To be effective, the Incoterms should also be specific about the place where responsibility changes. For example, if it is DAP (Delivered at Place), then the place should also be listed with the Incoterm.
It is important for commercial, logistics and finance teams to be aware and aligned on what is contained in all commercial contracts. These three letter acronyms have an important commercial and supply chain purpose.