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Which of the following is the best option when the sourcer, does not have an expertise or experience in international shipping and customs clearance?

A. FOB
B. CIF
C. LDP
D. FAS

1 Answer

7 votes

Final answer:

For a sourcer without international shipping and customs clearance expertise, LDP (Landed Duty Paid) is the best option as it places all responsibilities, including duties and taxes, on the seller until the goods are delivered to the buyer's location.

Step-by-step explanation:

When a sourcer does not have expertise in international shipping and customs clearance, the best option would be LDP (Landed Duty Paid). Under the LDP terms, the seller is responsible for delivering goods to a destination in the buyer's country, handling all the risks and costs involved, including duties, taxes, and other charges of delivering the goods thereto. This is significantly different from other Incoterms like FOB (Free On Board), CIF (Cost, Insurance, and Freight), or FAS (Free Alongside Ship), where the buyer takes on more responsibility for the transportation and customs clearance once the goods have been loaded onto the ship by the seller.

The choice of LDP removes the complexity of international logistics from the buyer, making it a beneficial option for parties without international shipping expertise. However, it's important to note that while LDP simplifies the process for the buyer, costs embedded into the LDP price might be higher than if the buyer were to arrange shipping and customs clearance independently. Understanding these terms can help avoid unexpected costs and risks in international trade.

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