Alibaba Trade Terms
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Basic 12 Alibaba Trade Terms
The most important thing in your AGREEMENT is Trade terms. But most starters don’t know about basic Alibaba trade terms.
Don’t be confused! Our shipping experts have explained 12 BASIC TRADE TERMS for you. They are easy to understand. This explanation comes with years of Alibaba shipping experience. After this, you understand your agreement more intelligently.
Keep reading to know more about their definition and BENEFITS. So you get an idea about your basic responsibility with every term.
What are Alibaba’s trade terms?
Alibaba CONNECTS businesses around the world. People trade with each other and do business. International commercial terms were introduced to ease international shipments and trade.
Two sides are involved in every transaction. One is a buyer, and the other is a Seller. These trade terms define their responsibility in the contract.
For example, we got a trade term FCA or free carrier. So in this term, Seller’s responsibility is to deliver your product to a CERTAIN PLACE. There is a carrier which you’ll choose.
He COLLECTS the shipment. The seller assumes the responsibility of loading the shipment for the destination. So that’s how these international trade terms work.
Benefits of using shipping terms
Alibaba shipping terms ease international trade and give ROLES to both sides. Buyers and sellers both have to perform their duties.
Here are the main benefits of using trade terms.
- No room for confusion with more clarity
Everyone has a responsibility. Both sides have to fulfill their parts. It’s like building a BRIDGE. Everyone does their part, and in the end, they combine and make the process smooth. Both know about the risk of not doing their part. This prevents HIDDEN COSTS. It makes everyone more responsible, and no room for confusion.
- Cost and time saving
In different terms, buyers and sellers have different responsibilities. The buyer and supplier agree on terms that benefit both. You both focus on your part. This gives a combined solution. Both invest time and cost. The burden is divided into two PARTS. Saves half of the time and cost of both.
Basic 12 trade terms Alibaba incoterms
Here are the 12 basic and common Alibaba trade terms.
- FCA-free carrier
The buyer requests sellers to hand the product to a third-party carrier in this term. The seller handles loading. Your part is unloading if delivery is at your location. The seller handles the CUSTOMS CLEARANCE. After that, it is your freight forwarder or carrier’s duty to handle things.
- EXW- ex-work
It means the seller delivers your order to their warehouse. It is the BUYER’S RESPONSIBILITY to pick up their goods. The seller does not load your goods or help you/the buyer in custom clearance. The buyer has to bear all the expenses and hazards.
- DPU (delivered at place unloaded)
All the risk transfers from the seller to the buyer after he ships your goods to the DESTINATION country. After that, the Buyer bears transport expenses and handles customs. The seller completed his delivery and managed export clearance.
- CPT (carriage paid to)
In this term, Seller pays for international transportation costs. He is responsible until the first freight forwarder of TRANSPORTATION collects the items. All the risk shifts to buyers. Yet the Seller handles all export customs clearance.
After the first CARRIER collects the items, he is no longer responsible. After that point, The buyer assumes all the responsibility.
- CIP (carriage and insurance)
The seller is responsible for the transportation and insurance of the shipment. The seller pays the CARRIAGE and INSURANCE. Sellers have to buy the highest level of insurance that covers up to 110% of the value of the goods.
- DAP (delivery at a place)
The seller handles delivery until the buyer specifies the FINAL DESTINATION. He handles the export customs and every responsibility. Yet, he does not deliver items to the transportation terminal. He has to deliver at Buyer’s place.
After delivery, all the hazards shifted from seller to buyer. Buyer handles import clearance and transport after delivery.
- DDP (delivered duty paid)
In This trade term, the seller delivers goods to the buyer’s WAREHOUSE. He handles all processes and costs incurred at import and export customs. He has responsibility until he unloads items at the buyer’s warehouse.
- FAS (free alongside ship)
It means the seller HANDLES till he delivers goods to the destination port. He handles all the loading and Export customs clearance. After that, all the risk of goods transportation and costs shifted to the buyer.
- FOB (free on board)
In this incoterm, the seller is only responsible for shipping goods at the port. The seller only handled the BOARDING of goods. After that, he is no longer responsible for goods. Buyer pays and chooses ship for shipping. After boarding, all the risks of overseas transit shifted from seller to buyer.
Once the goods are safely onboard on ship Seller handles the export customs.
- CFR (cost and freight)
CFR means the seller handles the delivery to a port destination. Risks of damage & loss shift from the seller to the buyer after goods are boarded to ship. The SELLER handles the export clearance.
- CIF (cost insurance and freight)
CIF has the same terms as CFR. The seller has the same terms and CONDITIONS in CIF. He had to pay for a transportation insurance coverage only basic level.
- LCL (less than container load)
LCL is a COMMON shipment term. Sellers merge many LCL or small shipments in the same container. He handles the shipment till the destination port.
How to choose the best trade terms on Alibaba?
Here are a few things to keep in mind while choosing trade terms at Alibaba.
Intercom terms mostly define responsibility. Both seller and buyer have responsibilities. In some terms, sellers have to handle the export side while you have to handle the import side. You must take responsibility.
Otherwise, the damage risk is on you. So focus on how much RESPONSIBILITY you take. Hiring a third-party agent for the shipping process outsources your responsibility. But first, check your available options.
Do you want insurance from sellers or want to pay on your own? Again want high-level insurance or a basic one. See your insurance options.
How much quantity do you want to ship? Small or large quantities. LCL or FCL. Do you want a handling or a complete shipping plan?
4. Time and money
Shipping handling is a time taking process. Try to choose less time-consuming trade terms. Receiving on your own and handling unloading takes time and equipment. But it saves you money if you can do it.
Yet, Every INTERCOM term comes with a different price tag. Try to seek good options while living within your budget. Take your time with choosing terms.
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FAQs about Alibaba Trade Terms
Which is better, FOB or EXW?
FOB is a better Intercom term. Sellers have to pay transportation costs and handle export customs clearance. In EXW, buyers pay for transportation. This depends on your circumstance and which one suits you more.
Why is the shipping fee so high on Alibaba?
Alibaba has individual sellers who compete with each other. They pay a seller fee and a 3% trade ASSURANCE fee. You have to pay extra to cover these costs. That caused Alibaba’s shipping fees to be so high.
Are you protected when buying on Alibaba?
Yes, Alibaba has trade assurance that gives you a refund option. It deducts 3% from every transaction through trade assurance. So in case of any issues, you file a refund. Also, the Seller INFORMATION page contains background information about the seller. You get more clarity.
Every trade term defines the seller’s and buyer’s responsibility. Some buyers hire a shipping company or shipping agent to OUTSOURCE their part. Your freight forwarder or shipping agent can perform these responsibilities on your behalf.
Finding reliable freight forwarders takes a lot of work. Most freight forwarders don’t have enough experience and infrastructure. Look no more!
LEELINE has professional staff working for more than a decade. Our expert solutions lower all the costs involved. Get real-time shipping updates.
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