Incoterms, which are also known by their long name of International Commercial Terms, are a set of 11 rules that define who is responsible for what during international transactions. These terms cover every task that is involved in international transactions as well as the risks and costs involved with the transaction of good from seller to buyer.
Incoterms are extremely important as they are known and accepted throughout the world as a requirement on all commercial invoices. These terms are important in reducing the risk of misunderstandings which could turn out to be costly.
Delivery At Place
Delivered Duty Paid
Carriage and Insurance Paid To
Delivered At Place Unloaded
In previous Incoterm publications, this was known as DAT (Delivery At Terminal)
The seller is responsible for all the costs and risks of delivering the goods to an agreed place of unloading
The seller organises all customs clearance and the unloading of the goods at the place of delivery
The buyer is responsible of sorting import clearance and any duties that are related
Carriage Paid To
Free Alongside Ship
Free On Board
Cost and Freight
Cost, Insurance, and Freight
The seller has all the same responsibilities as with CFR Incoterms, however they are also responsible for covering all insurance costs
The seller is required to purchase the minimum amount of insurance cover which is 110% of the invoice value. This has to be in the currency of the invoice and contract
If the buyer wants different insurance, the seller is responsible for arranging this but at the cost of the buyer
What are the rules of the Incoterms classified as?
All Incoterm rules are classified according to fees, the risk involved, the responsibility for formalities, and any issues relating to import and export.
What changed with Incoterms 2020?
The new Incoterms 2020 changed to consider the growth of the economy, as well to increase attention to security of the transportation of goods, and insurance coverage flexibility. To learn more about what changed, we can answer any questions you have. Contact us today.
Where can I find the Incoterms on my documents?
Incoterms are found on customs documents and declarations.