Clear and unambiguous shipping and delivery terms are core components of a robust international contract and the responsibility of UK exporters. Incoterms are a set of internationally recognised 3-letter trading terms, they describe the arrangements for getting goods from the seller to the buyer in international trade, whilst clearly dictating the obligations, costs and risks for both parties.
As part of the EU, shipping goods from Leicester to Paris has been little more complicated than shipping goods from Leicestershire to Lincolnshire; however as we near the end of the EU transition, our trade with the EU will be subject to customs formalities and controls.
Typically, when negotiating a contract with a buyer, both parties need to agree:
- the place where the goods will be delivered
- who of the two parties arranges transport
- who of the two parties handles and pays for insurance
- who of the two parties handles customs procedures
- who of the two parties pays any duties and taxes
In light of the UK leaving the EU and the added complexity of customs formalities and controls, some existing trading arrangements could become too onerous and risky for the buyer or seller. It is essential that UK businesses understand their obligations and the cost implications of this new way of trading with the EU, as existing contracts and delivery terms may need to be renegotiated to prevent either party exposing itself to too much risk.
This is the eighth in a series of 11 webinars aimed at helping companies prepare for international trading post EU transition period. Future webinars include:
- Managing financial risk and getting paid when trading internationally
- Developing overseas markets and managing international partners
- Effective international supply chain management