The Incoterms rules (INternational COmmerce TERMS) are a total of eleven terms published by the International Chamber of Commerce (ICC) based in Paris which define the conditions of supply of goods in international sales transactions. The first edition was published in 1936 and subsequently have been making several revisions and updates (usually every ten years) to the one currently in force which is Incoterms 2020.
What are the Incoterms used for?
The purpose of the Incoterms is to precisely define three aspects of international trade:
- The allocation of logistics costs between seller an buyer.
- The transmission of risks in transporting the goods.
- The documents and customs formalities necessary for export and import operations.
Who needs to understand the Incoterms?
The importance of the Incoterms is due to its widespread use that makes them internationally known. Therefore, all professionals involved in foreign trade should understand Incoterms: exporters and importers, carriers and freight forwarders, customs brokers, insurers, international credit professionals, sales and purchasing managers, consultants, etc.
What are the 11 Incoterms of 2020 version?
The Incoterms 2020 are classified in two categories according to the mode of transport:
Incoterms for any mode or modes of transport
- EXW Ex Works
- FCA Free Carrier
- CPT Carriage Paid To
- CIP Cost, Insurance and Freight
- DAP Delivered at Place
- DPU Delivered at Place Unloaded
- DDP Delivered Duty Paid
Incoterms for sea and inland waterway transport
- FAS Free Alongside Ship
- FOB Free On Board
- CFR Cost and Freight
- CIF Cost, Insurance and Freight
What does it take to use the Incoterms correctly?
For the correct use of the Incoterms, following the three letters of each term shall be included the exact place to which delivery of the goods is to be made, and afterwards the expression "Incoterms 2020".
Some examples of correct use of Incoterms 2020:
- FCA Port of New Orleans, United States, Incoterms 2020.
- CIP Tianjin airport, China, Incoterms 2020.
- DDP Hampton & Stevens Ltd. Warehouse, Sidney, Australia, Incoterms 2020.
Where can I learn more about Incoterms 2020?
The ebook Practical Guide to Incoterms 2020 provides all necessary information on each of the 11 Incoterms, with numerous charts and tables to understand how work and tips for use in daily practice.