WHAT IS AN INCOTERMS
and why it is important in your international expansion.
If your company exports, imports, or you are a distributor of international products, you probably know what we are talking about when we mention Incoterms.
Incoterms are a valuable tool that can help your company break into new markets and in turn, offer your customers a competitive and world-class supply chain.
So, what are Incoterms?
International Commercial Terms (Incoterms) are international standards that define the obligations of the seller and the buyer when making a shipment, which is why Incoterms describe the obligations of both parties, the costs and the risks involved.
The first Incoterms were published in 1936 by the International Chamber of Commerce. We currently use the 2010 version, which was published on January 1, 2011, which extends their application to any trade occurring within as country as they previously only applied to international transactions.
International shipments can be complicated because each country has its language, culture, customs regulations and judicial system, as well as establishing its own non-tariff trade barriers. Incoterms are the perfect solution to overcome this challenge: they are internationally recognized and serve as a common language for companies exporting internationally.
What to look out for?
While Incoterms® have long since proven their effectiveness, even in the United States, some American companies continue to rely on their own trade rules (RAFTD or UCC), even when these have been “replaced” by Intercoms®. This can lead to costly misunderstandings.
Do you have doubts about how to apply Incoterms in international shipments? Write to us and an expert consultant will contact you and your team.