Incoterms are international trade terms that define the responsibilities and obligations of both the buyer and seller in an import-export transaction. Incoterms is an acronym for international commercial terms.
The 11 Incoterms as set by the International Chamber of Commerce (ICC) establish the rules governing costs, risk transfer, and activities undertaken by the parties to the agreement. Governments and legal entities across the globe know and accept Incoterms.
Understanding Incoterms is crucial for companies because it helps them to:
- Avoid misunderstandings and disputes – Incoterms clearly define the roles and responsibilities of the buyer and seller, so everyone knows what they need to do. This helps to prevent misunderstandings and disputes, which can be costly and time-consuming.
- Ensure accurate pricing – Different Incoterms have different implications for the cost of the goods and the delivery of the goods. Understanding Incoterms helps companies to accurately price their products and services, including the cost of transportation, insurance, and customs duties.
- Manage risk – Incoterms help companies to manage the risks associated with international trade, including the risk of damage, loss, and theft during transportation.
- Comply with international regulations – Different countries have different regulations and laws regarding the import and export of goods. Understanding Incoterms helps companies to comply with these regulations and avoid legal issues.
Overall, understanding Incoterms is essential for companies engaged in international trade as it helps them to minimize risks, avoid misunderstandings, and comply with regulations.
These seven Incoterms pertain to all transport modes
These five Incoterms pertain to water transport
Marex has vast experience providing Incoterm training and consulting to public and private companies that perform crossborder transactions. We offer both virtual and onsite consultations. Contact us today to learn more about our Incoterm training service offering.