Whether you're sourcing equipment locally or importing directly, understanding Incoterms and delivery responsibilities can help prevent costly disputes. The key question is always: who carried the risk when the damage occurred?
The Risk-Transfer Problem
Many installers assume a supplier remains responsible for equipment until it arrives safely on site. In reality, responsibility often transfers much earlier depending on the agreed delivery terms.
Risk transfer can occur at these key points:
- 📍Supplier's warehouse
- 📍Loading onto a vehicle
- 📍Port of shipment
- 📍Destination port
- 📍Delivery to your site
Without clear terms, disputes arise when:
- ⚠️Solar panels arrive damaged
- ⚠️Inverters are lost in transit
- ⚠️Packaging is damaged during transport
- ⚠️Deliveries arrive incomplete
4 Common Incoterms for Solar Installers
1. EXW (Ex Works)
High RiskUnder EXW, the buyer assumes responsibility once goods are collected from the supplier's warehouse. The supplier's responsibility ends at their facility.
Your responsibilities:
- •You arrange and pay for all transport
- •You carry transit risk from day one
- •You must arrange transit insurance
2. FOB (Free on Board)
Medium-High RiskCommon for imports, FOB transfers risk once goods are loaded onto the vessel at the port of origin. The supplier remains responsible until that point.
Your responsibilities:
- •Supplier pays for loading and transport to port
- •Risk transfers when goods cross ship's rail
- •You carry risk for ocean transit and beyond
3. CIF (Cost, Insurance & Freight)
Lower RiskThe supplier arranges freight and insurance to the destination port. Risk transfers to you when goods are loaded onto the vessel.
Your advantages:
- •Supplier arranges freight and insurance
- •Insurance covers transit losses
- •Claims procedures still apply
4. DDP (Delivered Duty Paid)
Lowest RiskThe supplier remains responsible until goods are delivered to your agreed destination. This is the safest option for installers.
Your advantages:
- •Supplier carries risk throughout delivery
- •You receive goods at agreed location
- •Minimal dispute exposure
Documentation and Proof of Delivery
When equipment arrives, documentation becomes critical. Collect and retain:
- 📄Signed Proof of Delivery (POD)
- 📄Photos of goods before unloading
- 📄Photos of damaged packaging
- 📄Serial numbers and product labels
- 📄Delivery vehicle details
- 📄Driver information where applicable
🚨 Critical Rule: Never sign a clean POD if damage exists.
If damage is visible, follow these 4 steps immediately:
- •Record the issue on the delivery note
- •Take photographs immediately
- •Notify the supplier the same day
- •Retain all packaging where possible
Linking Delivery Terms to Insurance
Incoterms and insurance should always work together. Before placing an order, confirm:
- ❓Who holds transit insurance?
- ❓What does the policy cover?
- ❓What evidence is required for claims?
- ❓What are claim timeframes?
10-Point Best Practices Checklist
Use this checklist for every order:
- •Confirm delivery terms in writing
- •Establish when risk transfers
- •Verify who provides transit insurance
- •Inspect goods immediately upon arrival
- •Photograph all deliveries before unloading
- •Record any shortages or damage on the POD
- •Report issues within required timeframes
- •Store all delivery records electronically
- •Keep communication records with suppliers
- •Maintain documentation for dispute resolution
The Bottom Line
Understanding Incoterms is essential for protecting your business from avoidable losses. Whether you are purchasing locally or importing equipment, knowing exactly when risk transfers can prevent costly disputes over damaged, lost, or stolen goods.
For South African solar installers, the safest approach is simple:
- •Define delivery responsibilities clearly
- •Align delivery terms with appropriate insurance cover
- •Inspect and document all deliveries
- •Maintain thorough records from dispatch to final delivery
A few extra minutes spent clarifying risk today can save thousands of rands in disputes tomorrow.
