In an educational video, Trade Risk Guaranty walks you through an introduction to the Incoterms Rules and why you need to know them for your supply chain.
The topic of Incoterms can be overwhelming and confusing, but ultimately these terms define major responsibilities between the buyer and seller throughout the supply chain. So knowing which of the Incoterms rules you have selected is extremely important to your importing or exporting practices.
What Are Incoterms?
The term: ‘Incoterms’ stand for International Commercial Terms and they are a series of pre-defined commercial terms published by the International Chamber of Commerce, also known as the ICC. These terms inform sales contracts by defining respective obligations, costs, and risks involved in the delivery of goods from the seller to the buyer. Incoterms are amended by the ICC about every 10 years. So the current iteration is called Incoterms 2010, but there will most likely be an amended version coming out in 2020.
Incoterms are internationally recognized and accepted by governments, legal authorities, and practitioners worldwide. They are primarily intended to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods. So each of the 11 terms defines which parts of the transit the buyer is responsible for and which the seller is responsible for.
Knowing your Incoterms and understanding them reduces the likelihood of disputes or misunderstandings during the transportation of goods. They also become extremely important in the event of a Marine Cargo Insurance claim since they define which party has the insurable interest at the different points while the goods are in transit. This is one of the many reasons Incoterms should be agreed upon in writing before the goods ship and should never be auto-filled in by invoicing software.
Learn the Basics of the Incoterms Rules
Watch the following video to learn the basics of the Incoterms Rules and why you need to know what you have selected.
Did you like that video? Check out the next video in the series on the How Incoterms Rules Affect Your Marine Cargo Insurance.