Knowledge is power when it comes to understanding international shipping
When it comes to supply chains, when you know better, you do better. As with any industry, there are a myriad of technical terms that one needs to completely understand in order to effectively manage your freight forwarding requirements.
INCOTERMS play a strong role in facilitating international trade by creating a common understanding between buyer and seller.
Through clarifying obligations, shippers are able to maintain standard practices regardless of shipment type, country of origin or destination. Knowing the difference between, and when to correctly apply, for example EXW, CRF and DDP can have a large impact on the service received from your shipper, as well as the risk and cost implications associated to your freight.
INCOTERMS by definition are an internationally accepted set of standard commercial terms between buyer and seller when an export or import transaction is concluded. These commercial terms determine:
- Who pays the cost of each step of transportation
- Who is responsible for the loading and unloading of freight
- Who bears the risk of loss, and at which point this risk is transferred between the parties.
There are 11 recognised 2010 INCOTERMS and once you understand each acronym, you will have a better idea of how to manage your freight forwarding. A good source of definitions for The 2010 INCOTERMS is “The Eleven Rules in Brief”. Our handy cheat sheet provides a visual representation of The 2010 INCOTERMS as well as indicating where risk is passed between buyer and seller.
Download our handy INCOTERM guide by clicking the button below