Labels are important… in shipping:
There are a lot of different ways your freight can be handled from one stop to the next. Some important things to think about are risk, ownership, and responsibilities… They all transfer from seller to buyer at some point, but where and when it occurs can vary widely depending on the preferences of the parties involved, the type of cargo you’re transporting, how far it’s going, and how many borders it’s crossing.
But there is one method that I prefer to use above all else for about 80% of our shipments. It’s known as Incoterm FCA, or Free Carrier, and it’s for good reason.
MORE LIKE THIS: DOWNLOAD your quick reference Ecoterms 2010 chart
Your shipment matters most to you…
FCA puts nearly all of the shipping responsibility on the buyer, but not quite as much with EXW (Ex Works). I work primarily with buyers, and after 30 years of every possible situation you can imagine, I have learned that they benefit the most when they take risk and responsibility as early as possible in the chain of delivery.
Here’s why FCA is our go-to:
1. Seller involvement is required for international shipping
With EXW, the seller merely needs to have the cargo available for pick-up at their depot, and the buyer is responsible everything, including loading it. With FCA, however, the seller is responsible for getting it to the transportation hub, like the port or airport.
If you’re crossing borders, EXW isn’t going to work, because the seller needs to be involved in customs clearance, and with EXW, the buyer is picking it up before it goes through customs.
Most of our customers, whether they’re importing or moving abroad, tend to be international shipments, so we don’t do a lot of EXW shipping, although, when it’s domestic, that’s a completely different story.
2. Nobody cares about your cargo as much as you
Why is this important? As the buyer, you’re the one who wants the cargo to arrive safely and timely, because it’s your livelihood. That means when it comes to making decisions about routes, packing, or which shipping lines to use, you above all else will have the ability to weigh risks, and make decisions that you’re going to be comfortable with.
Mind you, I wouldn’t recommend handling everything by yourself, but you should be the one choosing the team to move your cargo, and you should have direct access to them.
Additionally, this gives you the comfort of knowing you are working with licensed freight forwarders who are TSA Certified Known. This gives them access to the best routes, and security will be less of an issue.
3. Nobody cares about your costs as much as you
For the sellers, if they have to take on the extra responsibilities and workload, you know it’s going to come through in the billing for they’re time. But here’s the other catch… they’re not going to really concern themselves with getting the best possible rates or traveling the right routes where the timing works with being available to receive the cargo. All of that cost WILL be passed onto you through their pricing, so what does it matter to them if it’s the BEST rate available?
If this is your responsibility, that means you’re going to go to your team of freight forwarders with an expectation that they help you fulfill it.
4. US customs
You’ll also be the one to make the tough choices that impact your bottom-line. As freight forwarders, we can minimize our chances of dealing with customs issues by having everything properly packed, labeled, listed, and accounted for, but that doesn’t mean the chance is 0. There’s ALWAYS a chance that you’ll have to go through an inspection, which will delay your shipment, and incur all sorts of warehousing fees, etc.
When this happens, as the party responsible, you will get to have direct access to your team dealing with the issue. You’ll get to be the one to make decisions that impact delivery time, costs, etc.
DDP, or Delivery Duty Paid, means that the seller is responsible for EVERYTHING until it gets to your port and cleared through customs. I’m not a fan of this, because it’s really much better to have somebody local deal with customs issues if and when they arise.
If you’re buying cargo from another country, I suggest using FCA Incoterms, so you have ultimate control over the outcome. If you’re interested in seeing which direction we’d recommend YOU go with your shipment, request a free quote, and we’ll help you figure it out!