Two quotations for the same charger can differ by fifteen per cent once the shipping term is applied, and neither supplier has changed the unit price. The term decides who books the freight, who insures the load and who pays the charges at the destination, and each of those lands in the landed cost whether or not it appears on the quotation.
Incoterms for charger buyers: the two questions they answer
Where the goods change hands, and who arranges the carriage.
The rules published by the International Chamber of Commerce answer those two questions and nothing else. They do not set the price, they do not transfer ownership, and they do not replace the payment terms in the contract. A charger purchase order that names a term without naming the port, the place or the party has not answered either question.
Question one: where the goods change hands
The place is part of the term, not a detail.
Risk passes at a named point, and everything before that point belongs to the seller. Where the point is a factory in Shenzhen the buyer owns a pallet; where the point is a warehouse in Rotterdam the buyer owns a container that has crossed an ocean. The difference matters most in the one shipment that goes wrong.
Question two: who arranges the carriage
Booking, documentation and insurance sit with one party.
Carriage is a service contract with a forwarder rather than a clause in the product agreement, which is why a charger programme usually keeps it with the party that has the volume. A brand shipping six containers a year cannot negotiate the rate that a factory shipping sixty can, and the term is what decides which of them makes the call.
The four terms that appear on a charger quotation
EXW, FOB, CIF and DDP cover most orders.
Each is a different split of cost and risk, and each is appropriate somewhere. The table sets out what the buyer takes on at the point the term names.
| Term | Risk passes | Buyer arranges | Common on charger orders |
|---|---|---|---|
| EXW | At the factory | Export clearance, carriage, insurance, import | Buyers with their own forwarder |
| FOB | On board the vessel | Carriage, insurance, import | Sea freight programmes |
| CIF | On board the vessel | Import clearance and onward delivery | Buyers who want one number |
| DDP | At the named destination | Nothing beyond receipt | Sample and pilot shipments |
What the term changes in the landed cost
Four lines, and only one of them is freight.
The origin charges at the factory, the freight to the destination port, the destination charges and the duty. A term quoted as FOB includes the first two and excludes the rest; a term quoted as DDP includes all four and folds them into the unit price, which is why a delivered quotation is harder to compare than a factory one.
Insurance, and why it is not automatic
Two of the four terms carry no obligation to insure.
Under EXW and FOB the buyer carries the risk from an early point and is not obliged to insure it; under CIF the seller must arrange cover at a minimum level that a brand may find thin for a container of electronics. The insurance certificate names the level, and it is requested with the documents rather than after a loss.
Where the confusion shows up in a charger order
Three patterns, and the third is the most common.
A term named without a place, so that two parties read it differently; a term that does not match the mode, since FOB belongs to sea and inland waterway carriage rather than to a courier; and a comparison drawn across two different terms without adjusting for the charges. Each is settled by writing the place and the party into the order.
Who the terminal charges fall on
They follow the term rather than the invoice.
Terminal handling, documentation fees and the destination charges are collected from whoever is named on the transport document, and a term that leaves them with the buyer produces an invoice after arrival rather than before it. For a charger programme with a fixed landed cost target, those charges belong in the budget from the first quotation.
What to write into the purchase order
Four items, and each is short.
The term with its three-letter code, the named place or port, the party that arranges the carriage, and the insurance level where cover is required. A purchase order naming those four removes the argument that otherwise arrives with the first delayed container.
FAQ
Does the Incoterm change who owns the goods?
No. The rules address delivery, risk and costs; ownership is set by the contract and the payment terms rather than by the three-letter code. Ask who carries the risk at the named point and who holds the documents, because those two decide what happens in the shipment that goes wrong rather than the ownership of the goods. Ask who holds the documents as well.
Can FOB be used for an air shipment?
It is written for sea and inland waterway carriage. An air shipment is better described with a term intended for any mode, and the shorthand used in conversation is not always one of the published rules. Use a term intended for any mode, because the shorthand used in conversation is not always one of the published rules and the wrong one leaves a gap in the cover.
Which term suits a first pilot run?
A delivered term puts the whole route in the supplier’s hands and gives one number to compare, which suits a small shipment. The trade-off is that the freight stops being visible as a separate line. Compare the delivered number with the factory one after adjusting for the freight and the insurance, because a delivered quotation hides both inside the unit price.
Who pays the import duty?
Whoever is named as the importer of record. A term that leaves clearance with the buyer also leaves the duty there, and the rate depends on the classification and the origin of the goods. Name the importer of record in the order, because a term that leaves clearance with the buyer also leaves the duty and the classification there. Name the party in the order.
Next step
Send the destination, the volume and the term you need to Wecent Group through the contact page. The reply quotes the charger programme on the term requested, with the origin charges itemised. Related reading: OEM and ODM charger manufacturing, wholesale chargers and charger quality control. External references: ICC Incoterms rules, European Commission taxation and customs, US Customs and Border Protection, UK HM Revenue and Customs, World Trade Organization and ITC Trade Map.
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