Making Incoterms Work for You
What are Incoterms?
Published by the International Chamber of Commerce and recognized by governments, legal authorities and companies worldwide, Incoterms (or “Incoterms rules” or International commercial terms) are three-letter codes that convey the tasks, costs, responsibilities and risks associated with the transportation and delivery of goods.
The 11 Incoterms rules are divided into two groups, with seven applicable to any method of transport, and four applying solely to marine trade.
The 11 Incoterms rules are divided into two groups, with seven applicable to any method of transport, and four applying solely to marine trade.
By agreeing on an Incoterm and incorporating it into a sales contract, a buyer and seller can clearly understand their obligations and responsibilities as goods transit from one party to the other.
Incoterms Hot Tips
It’s important to select the right Incoterm—the one that best suits the needs of your shipment, optimally allocates the risks during shipment and is appropriate for the shipping method you’re using.
If you are buying from outside the country, be sure that Incoterms are clearly spelled out in the Purchase and Sales Agreement.Review the meaning of the Incoterms before you commit to make sure you choose the one that fits best with what and how you are shipping.
Speak to your company’s legal representative, your Chamber of Commerce or a Trade Organization to learn more. Some of these offer simple, one-day courses on Incoterms.
Use Incoterms to your benefit
- Save time and hassle. By having the proper Incoterm included in the contract, all parties will know ahead of time whose insurance policy is on the hook in the event of a claim.
- Take the reins. Selecting the Incoterm gives your company the opportunity to control where the transfer of risk and costs occurs.
- Save money and reduce your risk. Use Incoterms to your advantage in your purchasing negotiations by pushing your assumption of risk as late in the process as possible.
We can help
Here at Cole, our logistics coordinators help customers understand the impact of Incoterms on their company’s assumption of risk, so they can choose the one that gives them the greatest protection.
Information provided by: Freight Dept. - Cole International
