Avoid Confusion with Shipping Rules : Let’s Talk Incoterms

Companies that still use the old contract terms that were used decades ago are not taking advantage of Incoterms and the opportunity they provide to improve your supply chain performance. Incoterms help avoid confusion that’s created by varied and sometimes wrongful interpretations of shipping rules in different countries. By having an understanding of Incoterms, you can minimize confusion and misunderstandings and can alleviate trade disputes and litigation in international shipping.

So what exactly are Incoterms?

The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. They are primarily used in international business transactions and procurement processes such as international sales and logistics operations. These terms are also encouraged by trade councils, courts, and international lawyers.

How are they used?

A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended primarily to clearly communicate the terms of ownership, costs, and risks associated with the purchase transportation and delivery of goods moving between countries.

Incoterms inform the sales contract by defining respective obligations, costs, and risks involved in the delivery of property from the seller to the buyer. However, it does not constitute a contract or govern law. Also, it does not define where titles transfer and do not address the price payable, currency, or credit items.

The Incoterm rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. Because they are intended to reduce or remove uncertainties arising from different interpretation of the rules in the various countries, they are regularly incorporated into sales contracts worldwide.

At Langham Logistics, we’ve created a graphic that will hopefully help you understand where the responsibilities of both buyers and sellers start and stop. Check out the infographic below for more information, and contact us today to see how we can help with your international and domestic shipping and logistics challenges.


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