Incoterms (International Commercial Terms) is a crucial document for participants in international transportation. This document establishes clear rules and conditions for the delivery of goods from one country to another, defining the roles and responsibilities of the seller and buyer at each stage of the international shipping process. Incoterms create the foundation for reliable and efficient international trade operations, fostering trust between parties and supporting overall economic development.
The primary goal of Incoterms is to standardize delivery conditions and unify the terminology used in international trade. This makes the process of negotiating and executing international contracts more transparent and efficient, reduces potential conflicts between parties, and contributes to the development of global trade.
Incoterms include 11 main terms describing various stages of goods delivery. Some of them include:
EXW (Ex Works): The seller delivers the goods at their own location, and the buyer bears all expenses and risks after picking up the goods from the seller.
FCA (Free Carrier): The seller hands over the goods to the carrier chosen by the buyer at a location specified by the buyer.
CPT (Carriage Paid To): The seller arranges transportation of goods to the specified destination but does not assume responsibility for risks after handing over the goods to the carrier.
CIP (Carriage and Insurance Paid To): Similar to CPT but with additional insurance of the goods.
DAP (Delivered at Place): The seller delivers the goods to the specified destination without clearing customs or unloading them.
DPU (Delivered at Place Unloaded): Similar to DAP, but the seller also unloads the goods at the destination.
DDP (Delivered Duty Paid): The seller delivers the goods and bears all expenses, including duties and taxes, to the destination.
Incoterms provide stability and transparency in international transportation. Choosing the right Incoterms helps avoid misunderstandings and conflicts between parties, making it an essential tool for successful international logistics operations. The Incoterms rules were updated in 2023, incorporating some changes such as delivery terms without unloading, cargo insurance, and other aspects to better align with modern requirements and realities of international trade.
While the changes in Incoterms 2023 are minor and careful, they play a significant role for trade and logistics professionals. Even small nuances can impact the overall terms and structure of international trade deals. New provisions, such as the “delivered at place unloaded” point, clarifications regarding cargo insurance, and other additions introduced in Incoterms 2023, aim for more precise and efficient regulation of international commercial relationships.
Trade professionals should pay attention to such changes to properly integrate them into their contracts and ensure consistency with current international transportation practices.
