Incoterms

TECHNICAL ADVICE

INCOTERMS
RULES FOR TRADE LOGISTICS by William Corley
Export America

Thirteen international commercial terms (“Incoterms”) describe the responsibilities of buyers and sellersin international trade. Incoterms
are definitions and guidelines for sales contracts. They address fundamental issues of cost and risk allocation. The International Chamber of Commerce (ICC) haspublished its Incoterms since 1936, and reference should be made to the latest edition. As terms of sale, Incoterms facilitate commerce by promoting understanding of the specific, respective tasks oftrading parties. They define the roles of buyers and sellers in the arrangement of transportation; they also outline when transfer of ownership of merchandise takes place. Incoterms therefore greatlyinfluence the actions of exporters, importers, freight forwarders, and others involved in international trade.
WORLDWIDE USE

(DDP—delivered duty paid, named place of destination). Other common termsinclude FOB (free on board, named port of shipment), CIF (cost, insurance and freight, named port of destination), CPT (carriage paid to named place of destination), and DDU (delivered duty unpaid,named place of destination). Incoterms delineate in a transaction who incurs which charges and fees, extending from product cost and international freight to import duty and inland freight at thedestination. Incoterms also set guidelines regarding documentary responsibilities of the buyer and seller, from product documentation and bills of lading to commercial invoices and exportimport licenses.COMPLETE INFORMATION

WHAT TO NOTE
The latest Incoterms include several changes from the previous edition (1990). Incoterms now specify the loading and unloading requirements of both buyer andseller. They also reflect international traders’ increased use of intermodal transportation. This has led to simplified delivery obligations under the term FCA. Meanwhile, FAS now requires the seller to...