Incoterms, or International Commercial Terms, are a set of internationally recognized rules that define the responsibilities of sellers and buyers in international trade. They are published by the International Chamber of Commerce (ICC) and are updated every few years to reflect changes in the global trade environment.
Incoterms are divided into two groups:
There are 11 Incoterms in total, each with a three-letter abbreviation. The most common Incoterms are:
Incoterms can be a valuable tool for businesses that trade internationally. They can help to clarify the responsibilities of each party in a transaction and can help to avoid disputes.
Here are some of the benefits of using Incoterms:
If you are involved in international trade, it is important to understand Incoterms and to use them in your contracts. Doing so can help to ensure that your transactions are smooth and successful.
In freight forwarding, Incoterms are used to determine the point at which the risk of loss or damage to the goods passes from the seller to the buyer. The Incoterm that is used will also determine who is responsible for arranging and paying for transportation, insurance, and customs clearance.
If the Incoterm is DDP, the seller is responsible for delivering the goods to the buyer's premises, cleared for import and ready for unloading. The buyer is responsible for nothing.
The choice of Incoterm will depend on a number of factors, including the type of goods being shipped, the distance the goods are being shipped, and the preferences of the buyer and seller.
It is important to consult with a freight forwarder or other international trade expert to choose the right Incoterm for your specific needs.