When the buyer arranges transport

Why should the parties agree that the buyer should arrange transport?

Typical reasons are:

• The buyer has more experience, has logistics arrangements in place
• The buyer can obtain better rates from transport providers due to their volume of business they can commit to

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Ex Works (EXW) may be the first Incoterms rule that comes to mind for these situations, but it is almost always a poor choice for cross-border sales

Ex Works requires the buyer to arrange export clearance, but in practice the seller has to become involved in this process by providing information about the product etc. The seller will also need to demonstrate to the local authorities that the goods are indeed being exported, and so are exempt from local VAT or sales taxes.

In the US, Ex Works consignments will be treated as “routed transactions” and subject to complex filing requirements under US Export Administration Regulations.

So if it has been agreed that the goods are to be collected from the buyer’s depot, then the Incoterms rule should be Free Carrier (FCA), with the depot specified as the named place

Another important difference from Ex Works is that the seller’s obligations include loading the goods onto the conveyance that has been provided by the buyer – something that in any case the seller is usually better equipped to do.

In some cases the seller may wish to transport the goods for the first leg of the journey themselves – for example taking the consignment to a logistics hub or terminal.

Again, FCA will be the rule to use, with the point of delivery being the named place.

This works well for air transport, or where a small consignment will be sharing a container with other goods (LCL Less than Container Load)

But where a full container is involved, transport by the seller to a terminal presents a number of problems, e.g. provision and return of the container, coordination between the two freight forwarders who represent the buyer and the seller.

In such cases, collection of the container from the seller’s premises by the buyer’s appointed carrier is much more straightforward.