What are Incoterms and why are they important?
Incoterms are international commercial terms which are used in the assignment of costs and responsibilities between buyers and sellers around the globe, which are very often mistaken and treated as shipping terms.
Incoterms were proposed by the International Chamber of Commerce (I.C.C.) to provide a framework when dealing with matters of sales contracts such as:
- Arranging and paying for transportation
- Customs clearance
- Duty and VAT payments
- Arranging necessary documentation and agreeing on the point where risk and insurance responsibility is passed over from the seller to the buyer.
Incoterms have been revised in ten year intervals to reflect international commercial practice. The last revision effected in INCOTERMS 2010 and we are expecting the next one to be available in 3 years’ time which will be known as INCOTERMS 2020.