Freight & Payments
Part of Freight and sourcing coordination
Comparing delivery terms before choosing a freight quote
Use the named Incoterms rule and actual quote inclusions to identify uncovered freight work before comparing offers to an Australian destination.
Before comparing freight quotes, identify where each supplier's price ends and which transport services remain to be bought. Record the agreed delivery rule, its precise named place and the actual inclusions in both offers. Compare quotes for the same goods and destination, with every uncovered or duplicated service visible.
Turn the sale term into a freight request
Incoterms® 2020 allocates specified obligations, costs and risk between buyer and seller when incorporated into the sale agreement. Write the rule, named place and year into the purchase terms. A three-letter abbreviation alone may leave the collection or delivery point unclear.
| Proposed rule | Freight enquiry starting point | Point to check |
|---|---|---|
| EXW, named place | Collection and the route onward | Under the rule, the seller need not load the collecting vehicle or clear the goods for export. Establish how those tasks can be performed. |
| FCA, named place | The agreed carrier handover point | Confirm the precise handover point and which collection or loading services are included in the quote. |
| FOB, named shipment port | Main carriage from the named shipment port and onward services | Confirm the precise handover point and which charges are included; check that the named rule fits how the goods are handed over. |
| DAP, named Australian place | Services outside the seller's stated offer | Confirm the delivery point and which import-related and other services fall outside the seller's offer. |
| DDP, named Australian place | Work, if any, outside the seller's stated offer | Confirm who handles any Australian import requirements included in the offer and whether the seller can carry out the agreed tasks. |
Read the sale agreement and both quotes for separately agreed services or qualifications.
Incoterms® 2020 Delivery Terms: Key Responsibilities and Freight Inclusions for Australian Imports
- EXW, named placeBuyer arranges collection, loading, export clearance, and onward transport. Seller only makes goods available at their premises.
- FCA, named placeSeller delivers goods to the carrier at the named point. Includes export clearance if specified. Buyer arranges main carriage and import processes in Australia.
- FOB, named shipment portSeller handles export clearance and loading onto the vessel at the named port. Buyer assumes risk and cost from that point onward, including main carriage and Australian import clearance.
- DAP, named Australian placeSeller delivers goods to the named destination in Australia, unloaded. Buyer handles import clearance, GST, and local delivery. Import requirements remain the buyer’s responsibility.
- DDP, named Australian placeSeller handles all costs, risks, and responsibilities—including export and Australian import clearance, customs duties, GST, and delivery to the final location. Requires seller to comply with ATO and DAFF regulations.
Mark each uncovered service
Map the movement from the supplier's packed-goods location to your Australian receiving point. Mark each relevant service included in goods price, included in freight quote, separately payable or unconfirmed.
Check collection, export handling, main carriage, destination handling, clearance support and local delivery as applicable. Ask who arranges insurance and what cover is proposed; the delivery abbreviation alone does not establish the policy bought.
Confirm that each quote uses the same collection and delivery points, cargo figures, service mode and timing assumptions. A changed final pack may require a revised freight assessment. Leave an unpriced service open rather than entering zero.
For example, an FCA factory offer and a DAP Australian warehouse offer call for different freight enquiries. The comparison is the work required to receive the same product and quantity at the same warehouse. Neither term establishes a price advantage by itself.
Check whether the parties can do the work
EXW can leave an overseas buyer arranging loading and export processes near the supplier. For DDP, ask the overseas seller to explain how it proposes to handle any Australian import tasks included in its offer. Ask each party how it will carry out its stated tasks before relying on the abbreviation.
Australian permit and biosecurity conditions depend on the goods; a delivery rule does not override them. If the seller proposes to arrange import clearance, establish who will supply accurate product information, who will act in the required import role and how open permit questions will be resolved. Seek a licensed customs broker's help for the actual shipment where needed.
Choose a freight quote once its route, inclusions, exclusions and handovers fit the sale terms. Record the remaining task owners. Product quality, payment, ownership and remedies for delay belong in the wider purchase agreement.
Pros and Cons of DDP vs FOB for Australian Importers
- DDP (Delivered Duty Paid)Pros: Full control over import process; no surprise fees; one point of contact. Cons: Higher upfront cost; seller must be compliant with ATO, DAFF, and biosecurity rules.
- FOB (Free On Board)Pros: Lower upfront freight cost; clearer division of responsibilities. Cons: Buyer must manage import compliance, GST, customs, and potential delays; requires a licensed customs broker.
