Incoterms

Understanding Incoterms at B & B Global Trading Limited Partnership

At B & B Global Trading Limited Partnership, a clear understanding of Incoterms (International Commercial Terms) is essential to ensure smooth, transparent, and risk-managed international trade. Incoterms are standardized rules created by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers for the delivery of goods in international transactions. They outline who is responsible for shipping, insurance, risk, and costs at each stage of the delivery process.

By using Incoterms, we provide our global clients with clarity, reliability, and reduced risks when importing or exporting goods. As a company exporting from the Philippines and Thailand to markets in Asia, Europe, America, and Africa, Incoterms play a vital role in defining our logistics and commercial responsibilities, helping our clients make informed decisions about shipping, risk management, and cost allocation.

Why Incoterms Matter

International trade involves multiple steps, including production, packaging, shipping, customs clearance, and final delivery. Without standardized rules, misunderstandings can arise about who pays for shipping, insurance, or customs duties. Incoterms:

  1. Clarify Responsibilities: Clearly define obligations of buyers and sellers at each stage of transport.

  2. Reduce Risk: Assign risk of loss or damage to either party at specific points.

  3. Simplify Contracts: Provide universally recognized terms, minimizing the need for lengthy explanations.

  4. Enhance Global Trade: Facilitate international commerce by creating predictable, standardized rules.

At B & B Global Trading Limited Partnership, we adopt Incoterms to ensure transparency, fairness, and smooth coordination between our operations in the Philippines and Thailand and our global clients.

Our Approach to Incoterms

When engaging in international trade, we carefully select the appropriate Incoterm for each transaction based on:

  • Destination country requirements

  • Shipping method (sea, air, or land freight)

  • Buyer’s preference for risk and cost responsibilities

  • Value and type of goods

We work closely with clients to explain the implications of each term and recommend the most suitable options to meet their business needs while ensuring cost-efficiency and risk management.

Major Incoterms and Their Explanations

Below are the major Incoterms that we use in our operations, based on the 2020 ICC Incoterms update:

1. EXW – Ex Works

  • Seller’s Responsibility: Minimal. The seller makes goods available at their premises.

  • Buyer’s Responsibility: Handles all transportation, export/import clearance, and risks from the point of pickup.

  • Use Case: Suitable when the buyer has the capacity to manage logistics independently.

  • Benefit: The seller bears minimal responsibility and cost.

2. FCA – Free Carrier

  • Seller’s Responsibility: Deliver goods to a named carrier at a specified place (warehouse, port, or terminal).

  • Buyer’s Responsibility: Takes over risk and cost once the goods are delivered to the carrier.

  • Use Case: Common for containerized shipments; flexible for multiple modes of transport.

  • Benefit: Risk transfers to the buyer early, giving them control over international shipping arrangements.

3. CPT – Carriage Paid To

  • Seller’s Responsibility: Arranges and pays for transport to the agreed destination, but risk transfers to buyer once goods are handed to the carrier.

  • Buyer’s Responsibility: Handles insurance and import duties at destination.

  • Use Case: Useful for buyers who want the seller to handle freight but manage insurance separately.

  • Benefit: Balances responsibility between seller and buyer.

4. CIP – Carriage and Insurance Paid To

  • Seller’s Responsibility: Arranges and pays for transport and minimum insurance to the destination.

  • Buyer’s Responsibility: Assumes risk once goods are delivered to the carrier; may purchase additional insurance if desired.

  • Use Case: Ideal for high-value shipments where insurance coverage is critical.

  • Benefit: Provides additional protection for buyers while keeping shipping logistics simple.

5. DAP – Delivered at Place

  • Seller’s Responsibility: Bears all costs and risks to deliver goods to the named destination (excluding import customs).

  • Buyer’s Responsibility: Handles import clearance and duties.

  • Use Case: Common in cross-border shipments where the seller manages most logistics.

  • Benefit: Buyer receives goods ready for unloading, reducing effort and complexity.

6. DPU – Delivered at Place Unloaded (formerly DAT)

  • Seller’s Responsibility: Responsible for all costs and risks including unloading at destination.

  • Buyer’s Responsibility: Manages import clearance and duties.

  • Use Case: Ideal for deliveries to warehouses, factories, or terminals where the seller can unload efficiently.

  • Benefit: Simplifies delivery for buyers, as unloading is included in the seller’s responsibility.

7. DDP – Delivered Duty Paid

  • Seller’s Responsibility: Bears all costs, risks, shipping, and import duties to deliver goods ready for use at destination.

  • Buyer’s Responsibility: Minimal; receives goods fully cleared for import.

  • Use Case: Suitable for buyers seeking a completely hassle-free import process.

  • Benefit: Maximum convenience for buyers, with the seller managing all logistics and customs compliance.

8. FAS – Free Alongside Ship

  • Seller’s Responsibility: Delivers goods alongside the ship at the named port of shipment.

  • Buyer’s Responsibility: Responsible for loading, sea freight, and insurance.

  • Use Case: Common in bulk cargo or commodity exports.

  • Benefit: Reduces seller responsibility while giving buyer control over sea freight.

9. FOB – Free On Board

  • Seller’s Responsibility: Delivers goods on board the vessel at the named port.

  • Buyer’s Responsibility: Assumes risk and cost after goods are loaded on the ship.

  • Use Case: Widely used in maritime shipments.

  • Benefit: Transfers risk at a clear, verifiable point.

10. CFR – Cost and Freight

  • Seller’s Responsibility: Pays cost and freight to the destination port, but risk transfers once goods are loaded on the vessel.

  • Buyer’s Responsibility: Assumes risk during transit and handles insurance.

  • Use Case: Common in sea freight transactions.

  • Benefit: Seller covers shipping costs while the buyer bears transit risk.

11. CIF – Cost, Insurance, and Freight

  • Seller’s Responsibility: Pays for shipping and minimum insurance to destination port.

  • Buyer’s Responsibility: Assumes risk once goods are loaded; can buy additional insurance if desired.

  • Use Case: Preferred for ocean shipments of high-value or fragile goods.

  • Benefit: Provides basic insurance protection, minimizing risk for the buyer.

Why Choose B & B Global Trading Limited Partnership for Incoterm Management

  1. Expert Guidance: Our team explains Incoterms in detail, helping clients choose the right terms based on cost, risk, and logistics requirements.

  2. Global Compliance: We ensure all Incoterms usage complies with ICC standards and international trade regulations.

  3. Risk Management: By clearly defining responsibilities, we reduce the risk of disputes and shipment delays.

  4. Flexible Options: From EXW to DDP, we tailor the terms to suit both buyers’ and sellers’ preferences.

  5. Seamless Logistics: Our offices in the Philippines and Thailand, combined with Port of Manila shipments, guarantee smooth transport and delivery worldwide.

Welcome To B&B Global Trading Limited Partnership

Understanding and using the right Incoterms is essential for secure, transparent, and efficient international trade. At B & B Global Trading Limited Partnership, we leverage Incoterms to:

  • Clarify responsibilities between buyers and sellers

  • Reduce risk of loss or damage during transport

  • Streamline shipping, customs, and logistics processes

  • Provide clients with flexible and safe trade options

From local shipments in the Philippines and Thailand to exports across Asia, Europe, America, and Africa, our knowledge and application of Incoterms ensure that every transaction is secure, compliant, and cost-effective. By partnering with us, clients gain not only quality products but also professional guidance in international trade practices, making global commerce simpler and more predictable.