International trade rules (incoterms)

International trade rules (incoterms) – what are they?

International trade rules are a set of standard trade terms developed by the International Chamber of Commerce (ICC) that are used to define the obligations, costs and risks involved in the transportation of goods between buyer and seller. The rules are used worldwide and are intended to simplify international trade by providing clarity in trade agreements.

Incoterms are divided into different categories that determine how costs and risks are shared between parties. Each term contains detailed rules for delivery, including:

Seller’s obligations: they specify what tasks the seller must perform to deliver the goods, such as loading, transportation to the port or customs clearance.
Buyer’s responsibilities: indicate when the buyer assumes responsibility for the goods, which may include transportation, insurance and customs procedures in the recipient country.

Examples of common Incoterms terms are:

EXW (Ex Works): the seller makes the goods available at its facility, and the buyer assumes all costs and risks of transportation from the time of receipt.
FOB (Free On Board): the seller bears the costs and risks until the goods are loaded onto the ship, meaning that the liability shifts to the buyer at the time of loading.
CIF (Cost, Insurance and Freight): the seller bears the cost of transportation and insurance to the port of destination, and the risk shifts to the buyer at the time of loading onto the ship.

Understanding the Incoterms rules is crucial for any company involved in international trade, as it helps eliminate misunderstandings and disputes related to the delivery of goods. In addition, incoterms are regularly updated, making it essential for traders to stay abreast of the latest changes in order to effectively manage their trade operations.