What are Incoterms?

Incoterms are international rules that define who is responsible for the cost and risk of transporting goods. They are set by the International Chamber of Commerce and help make sure both the sender and receiver understand who pays for what, and where responsibility for the goods passes from seller to buyer.

When booking an international pallet delivery, you must tell us which Incoterm you are using. For most PalletOnline deliveries, this will be either DAP or DDP. These terms explain who pays the import duties and taxes when the goods arrive in the destination country.

DAP (Delivered At Place)

Under DAP, you as the sender pay for the delivery to the named destination. The buyer is responsible for importing the goods, paying duties and taxes, and unloading the pallet. Risk passes to the buyer once the goods are ready to be unloaded at the destination.

• You pay for export paperwork and transport
• The buyer clears the goods through customs and pays any import charges
• The buyer unloads the goods

You must clearly state the full delivery address when using DAP. If this is not clear, it may cause delays or disputes about where the goods should be delivered.

DDP (Delivered Duty Paid)

Under DDP, you take responsibility for the whole journey. This includes export and import paperwork, all duties and taxes, and transport to the final delivery point. The buyer only needs to unload the goods.

• You pay for export paperwork, transport, import clearance, duties and taxes
• The buyer unloads the goods

You must clearly state the full delivery address when using DDP. This term is often used when delivering to residential customers who cannot clear customs themselves.

What other Incoterms exist?

For reference, these are some of the other common terms you may see in international trade:

• EXW (Ex Works): Buyer collects the goods from the seller’s premises and handles everything else
• FCA (Free Carrier): Seller delivers the goods to the first carrier. Buyer handles transport from there
• CPT (Carriage Paid To): Seller pays for delivery to the named destination but risk passes earlier
• CIP (Carriage and Insurance Paid To): Same as CPT but the seller also pays for insurance
• DPU (Delivered at Place Unloaded): Seller pays for delivery and unloading. Buyer clears customs and pays import duties

PalletOnline does not usually work with sea freight Incoterms such as FOB, CFR or CIF as these apply to full containers or bulk loads.

Why do I need to get this right?

If you do not select the correct Incoterm or provide full paperwork, your pallet could be delayed at customs. You must know who is paying for the import charges and make sure the buyer is ready to clear the goods if needed.

All Incoterms must be agreed with your buyer before booking. Include the correct term and delivery address on your commercial invoice to avoid delays or mistakes.

Example:

UK Seller sending a pallet to Dublin using DAP:

• Commercial Invoice shows: Incoterms DAP, 23 Example Street, Dublin, Ireland
• UK Seller pays for transport and export paperwork
• Irish Buyer pays VAT and customs duties before delivery

Need a full list of Incoterms?

You can view the full set of Incoterms and what they mean on the ICC website: iccwbo.org.

Gathering the right information before you book will help your pallet delivery move smoothly through customs. Make sure you have the Incoterm, EORI numbers, and commercial invoice ready when you place your order.