If you are working in the international shipping business, it is essential to clearly and precisely define the terms of delivery of goods between seller and buyer. Incoterms, which stands for International Commercial Terms, are rules defined for this purpose and are standardised and globally recognised contractual terms developed by the International Chamber of Commerce (ICC).

These rules set out the obligations, risks and expenses of each party involved in a transaction where goods are transferred from one state to another. In particular, they set out whether the seller or the buyer is responsible for the transport and insurance of the goods to the agreed place; who will carry out the customs procedures at the export and import ends; where and when the goods are to be delivered, meaning where the transfer of ownership and risk is passed from one party to the other; and what expenses are associated with the delivery of the goods which each party must bear.

The use of Incoterms rules offers numerous advantages for those engaged in international trade, including avoiding ambiguities and misunderstandings in the definition of contractual terms, and reducing the risk of disputes and litigation between the parties, by simplifying communication and documentation between seller, buyer, carrier, insurer and customs.

These standards are periodically updated by the ICC to adapt to global market needs and trends. The latest edition is from 2020 and came into effect on 1 January. It features 11 Incoterms, divided into two groups: rules which apply to all forms of transport, both multimodel and unimodal, and rules which only apply to maritime transport and inland waterway transport.

In order to select the most suitable Incoterm for your contract of sale, it is necessary to consider a variety of factors, such as the type of goods, the form of transport, the place of delivery, the customs regulations, and the market conditions. In addition, it is important to specify the chosen Incoterms in the contract, followed by the agreed location, the year of the version of Incoterms and the name of the company.

If you want to learn more about Incoterms rules and how Tecnofreight can help you manage your international shipments, contact us now.