Today, I’m going to walk you through 22 of the most common international shipping terms so that you can better understand how your products get from your supplier to you, an Amazon FBA center, or a warehouse.
Keep reading to get our free breakdown of the most common shipping incoterms.
The Just One Dime team and I have put in the work to understand and make sense of these complex terms so we can keep things simple for you.
People & Things
Cargo and freight refer to your products. Specifically, cargo and freight are products transported by a ship, motor vehicle, train, or aircraft.
In the case of an Amazon store, cargo or freight refers to the products manufactured by a supplier and purchased by you, the Amazon seller.
Buyer and importer refer to you, the person who purchases the products.
Yes, in Amazon store language—and in most Just One Dime content—you are the seller. However, before your products are available for sale to your customers, you are the buyer who purchases those products from a supplier.
You are also the importer if you purchase your products from an international supplier.
For example, if US Amazon seller Bobby McGee sources his products from Chinese supplier Lucy Pickleberry, Bobby is the importer and the buyer. He is importing products into the US from China to sell.
There are some cases where you would be a buyer, but not an importer. If you source from a domestic supplier—a supplier in the same country you will sell in—there are no products to import.
For example, if Bobby McGee sources his products from a US supplier, there is nothing to import because the product doesn’t cross international borders. In that case, Bobby would not be an importer.
That said, the majority of sellers tend to have their products built in China and sold in other Amazon marketplaces. This means that in most cases you are both the buyer and the importer in shipping terms.
Exporter refers to the supplier that you purchase your products from.
For example, if Bobby McGee purchases his products from Chinese supplier Lucy Pickelberry, Lucy is the exporter.
However, just as with importers, if you choose to source your products domestically, your supplier would not be an exporter.
Put another way: If you source your products from a country different from the one you will sell products in, you are the importer and your supplier is the exporter. But if you source your products from the same country you will sell them in, you are simply the buyer and your supplier remains the supplier or manufacturer, even in fancy shipping terms.
Shipper and consignor refer to the party that pays for the shipment of inventory, which is typically you. The consignor can also be, in some instances, a factory or warehouse.
Either way, the party that orders and pays for the shipment of products to be delivered elsewhere (regardless of how the products are delivered) is the consignor/shipper.
While shipper may be a more common term, consignor is used in legal situations. When you set up the shipment of your products, especially if they will pass through customs, the term that will likely prevail on your documents is consignor.
Consignee refers to the party that receives your products before they are shipped to retail shoppers.
If you sell FBA—fulfilled by Amazon—the Amazon FBA fulfillment center where your products are stored, and then shipped to customers from, is the consignee.
If you instead sell FBM—fulfilled by merchant—the consignee will most likely either be you (if you will ship orders to customers from your residence) or a warehouse that you have contracted to use through a 3rd party logistics company (3PL).
Freight forwarders are companies that arrange the storage and shipment of your products.
Freight forwarding companies do not actually ship products themselves, in fact they often don’t own any cargo vessels. They simply manage the process.
Freight forwarders arrange all the details of your shipment. By hiring a freight forwarder, you can avoid having to dive into the logistical details of getting your products from your supplier to the products’ final destination.
For example, let’s say Bobby McGee needs to get his products from an inland Chinese manufacturer to an Amazon fulfillment center in Texas. This means that Bobby must figure out how his products will be transported:
- By land or air from the manufacturer to Chinese ports
- By air or sea across the Pacific Ocean to the US
- By land or air from the US point of entry to the Texas fulfillment center
Rather than trying to figure out each individual shipping stage’s transportation plan and arrangements, Bobby employs a freight forwarder to figure all of that out for him. And he rests easier at night for it.
Depending on the amount of logistics involved with getting your products to their fulfillment destination, you can save yourself a lot of hassle by hiring a freight forwarder.
Before you sign with one, however, be sure you’ve completely read and understand the terms and conditions so you don’t end up paying surprise fees.
Carriers are companies that physically ship your products.
Unlike a freight forwarder who arranges the transportation of products, carriers actually do the transporting. In other words, freight forwarders (or you or your supplier) arrange for carriers to take goods by land, air, or sea to their destination.
Your local postman is a carrier, as are well-known companies such as FedEx, UPS, DHL, etc.
Customs brokers (also known as custom agents) assist importers and exporters to meet federal requirements for transporting products from their origin country into their destination country.
Customs brokers should not be confused with customs officials, the federal agents who inspect shipments entering and exiting the country.
Customs brokers, on the other hand, work with carriers and freight forwarders to ensure that goods move seamlessly as they undergo inspection by customs officials.
Freight forwarders often work with specific customs brokers to facilitate their work. Some customs brokers, however, work independently.
If you don’t elect to hire a freight forwarder, you can still hire a customs broker as an independent contractor to ensure your products don’t get held up at customs, or worse, sent back to their country of origin.
A customs broker is an invaluable contractor to hire, regardless of the shipping method you choose.
Shipping methods vary in price by type of shipping. As a general rule, the faster the shipment, the greater the cost. However, all shipping fees are based on:
- Mode of transport
- Cargo weight
- Cargo volume
- Cargo size
- Travel distance
- International trade market
Because, in most cases, your cargo must be imported and shipped trans-oceanically, the global climate can affect the costs of shipping. Keep current global politics and affairs in mind as you build out your shipping plan and elect different modes of transportation.
Carriage is a means of transporting your products from one place to another. No matter how your products are shipped, their transportation method is their carriage.
You might see the term “carriage” used on legal documents that outline the specifics of your cargo’s transport. This document is often called the conditions of carriage.
Sea freight is a means of shipping products via seagoing vessel; it’s the slowest and cheapest option and is ideal for heavy or large-volume shipments.
Because Amazon sellers often order inventory in large quantities (think 200+ units of a certain item) sea freight is a popular method for getting that inventory from China (or wherever else they’re made) to fulfillment centers.
Orders shipped via sea freight will pass through customs twice: once as they leave their country of origin and again when they arrive at their destination country.
Air freight is a means of shipping products via airplane; it is most suitable for transporting smaller and medium-sized shipments faster than sea freight.
Air freight also costs more than sea freight.
If you sell exceptionally light, small, or delicate products—and/or you’re in a hurry to get them to fulfillment centers—you might opt for air freight.
For example, let’s say Bobby McGee sells boxes of paper clips on Amazon. Bobby is especially eager to start selling those paperclips like yesterday. In that case, Bobby elects an air freight carrier to ship his products from their Chinese manufacturer to the fulfillment center that will ship his paperclips to customers.
Air freight is useful if you will sell a test batch of inventory before committing to a large-scale manufacturing run of your product.
It is also a great option if your Amazon store is about to run out of inventory and you can’t wait for your entire order to arrive by sea freight.
Air express is a door-to-door shipping service for smaller parcels; it’s the fastest and most expensive option, and is suitable for smaller shipments.
You would usually not use air express to ship products to fulfillment centers like you may with air freight.
Air express carriers, such as FedEx and DHGate, typically handle customs for you with this shipping method.
You might choose air express shipping to receive individual product samples from suppliers.
That said, because air express is so fast, it is much more expensive than both sea and air freight. It is much less suitable for large or bulky shipments.
Full container load (FCL) is when your products occupy a shipping container on their own, often comprising the entire container.
In this case, container refers to giant shipping boxes—usually for sea freight—made from corrugated metal. These containers are typically 20 or 40 feet long.
FCLs are ideal if you are transporting an exceptionally large batch of inventory and/or a large batch of bigger or bulkier products.
For example, if Bobby McGee orders 100 coffee tables from his manufacturer, he might choose to fill an entire 40’ container to ship those tables. Likewise, if he were to order 5,000 ceramic coffee mugs, he might still choose an FCL.
You can often receive shipping discounts if your cargo comprises an entire, 40’ FCL.
Less than container load (LCL) is when your products occupy a portion of a shipping container alongside other importers’ goods.
For example, if Bobby McGee orders only 1,000 ceramic coffee mugs, he might elect to partially fill a 40’ container and share the remaining space with other importers.
When you opt to ship via LCL, you run the risk of delayed and/or damaged inventory. This is because when your cargo is mixed with other companies’ cargo, the container is often opened multiple times by carriers and customs officials en route.
That said, if you order a smaller inventory but don’t want to pay for air freight, LCL sea freight is a strong contender.
Now that we know the basic actors and methods when it comes to international shipping, let’s examine common shipping plans.
Incoterms refer to a set of internationally-recognized shipping plans, each of which establishes the responsibilities of the supplier and buyer.
Some plans place more duty on the supplier to get the products from the factory and to their warehousing space. Other plans, however, place most of that responsibility on the buyer. And some plans place certain responsibilities on third parties such as freight forwarders.
When you place your inventory order through Alibaba.com’s Trade Assurance program, you can select the incoterm you prefer. At the same time, you pay any associated or additional transportation costs to your supplier.
Download our guide to the most common shipping incoterms, and how to read them, at JOD.com/incoterms.
I will walk you through the five most common incoterms for Amazon sellers:
Ex works (EXW) means your own freight forwarder picks up the inventory from your supplier and handles all the logistics.
In EXW, your contracted freight forwarder is responsible for absolutely everything, including the initial transport of your products from their factory of origin. This freight forwarder oversees everything until your products are safely deposited at their destination.
For example, let’s say Bobby McGee orders hundreds of ceramic mugs from a Chinese manufacturer. When his order is ready for shipment, his freight forwarder:
- Picks up the inventory from the manufacturer
- Handles the inventory’s inland shipment to its Chinese port of departure
- Manages the inventory’s transport onto a cargo sea vessel
- Overseas the inventory’s trans-Pacific sea voyage
- Clears the inventory with customs officials
- Manages the inventory’s inland journey from its US port of entry to its final destination
Free on board (FOB) means your supplier handles shipping from the factory to the port of departure, as well as loading the goods onto the ship before your freight forwarder takes over.
In FOB, the supplier is responsible for your inventory, including its welfare, until the cargo arrives at the port of departure.
At that point, the freight forwarder you’ve contracted is responsible for full and final delivery of the cargo to its designated fulfillment center, warehouse, etc.
So, FOB differs from EXW in that the supplier handles the shipping up until when the goods arrive at the port where the cargo ship leaves from instead of the freight forwarder. The freight forwarder handles the goods from then on.
For example, let’s say Bobby McGee orders his ceramic mugs FOB. When his order is ready for shipment, the supplier takes care of inland shipping—getting the inventory from the factory in China to a sea port and onto its designated sea-vessel. At that point, the freight forwarder Bobby has contracted assumes responsibility for tracking his inventory on its ocean voyage, as well as getting his inventory through US customs, from its US port of entry inland, and to its final destination.
Delivered At Place (DAP) means your supplier manages the full shipping operation all the way until your units arrive at their final destination (such as a warehouse); your payment to the supplier, however, does not include duties and customs fees.
Unlike FOB and EXW, there is no freight forwarder. Your supplier handles it all.
For example, let’s say Bobby McGee orders his ceramics mugs DAP. When his order is ready for shipment, his supplier is responsible for getting the cargo onto the appropriate vessel and ensuring that everything is in place logistically to get Bobby’s mugs from the Chinese factory to his designated Amazon fulfillment center.
However, in addition to the fees Bobby has paid his supplier to handle the transport, Bobby must separately pay customs clearance fees, duty fees, and taxes at the port of import.
DAP is also known as DDU: Delivered duty unpaid. It’s the opposite of delivered duty paid (DDP).
We saved the best for last: DDP is the option we recommend most!
Delivered duty paid (DDP) means your supplier manages the full shipping operation all the way until your units arrive at their final destination (such as a warehouse). Additionally, your payment to your supplier includes duties and customs fees.
For example, let’s say Bobby McGee orders his ceramic mug shipment DDP. When his order is ready for shipment, his supplier is responsible for getting his cargo onto the appropriate vessel and ensuring that everything is in place logistically to get Bobby’s mugs from the Chinese factory to his designated Amazon fulfillment center.
Bobby doesn’t worry about anything, including customs clearance fees, because he’s paying the supplier to handle all of that.
In addition to the remaining incoterms, there is lots to learn about the international shipping process and how to securely get your cargo from China (or wherever you will have your products manufactured) to their designated destination. Get the full scoop on international shipping—-along with how to build and source your product, build your Amazon listing, scale your business, and more—at JOD.com/freedom.
What’s your biggest headache when it comes to inventory shipment? Let me know in the comments.