What are Incoterms?

Question: What are Incoterms?
Answer: Incoterms stand for “International Commercial Terms,” and they are set by the International Chamber of Commerce (ICC) every 10 years. The current edition of these rules is from 2020.

Incoterms have different abbreviations for terms such as:

• FOB (Free On Board): The seller is responsible for delivering the goods on board the vessel nominated by the buyer. Risk transfers to the buyer once the goods are on board.
• DAP (Delivery At Place): The seller delivers when the goods are placed at the disposal of the buyer at a named place of destination. The seller bears all risks involved in bringing the goods to the designated place.
• CIF (Cost, Insurance & Freight): The seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination and procure marine insurance against the buyer’s risk of loss or damage during transport.

Additional Incoterms include:

• LDP (Landed Duty Paid): The seller is responsible for delivering the goods to the buyer’s premises, including paying for all transportation costs and import duties.
• DDP (Delivered Duty Paid): The seller delivers the goods when they are made available to the buyer at the named place in the country of importation. The seller bears all costs and risks involved in bringing the goods to the destination, including duty, taxes, and other charges upon import.

These terms clearly lay out the responsibilities of the buyer and seller when handling, transporting, and delivering goods. Understanding Incoterms is crucial for international trade, as they help define who is responsible for each part of the shipping process, thus avoiding confusion and disputes.

For more detailed information or to discuss which Incoterm is best suited for your needs, Please read these blogs or contact us at any time.