Inbound Logistics | March 2023

INCOTERMS: THE GOOD, THE BAD, AND THE AMBIGUOUS

Incoterms are a set of international rules that interpret the most commonly used trade terms. Applying Incoterms to sales and purchase contracts makes global trade easier and helps partners in diœerent countries understand one another. By Debra Phillips

D oing business globally can be complex. With multiple stakeholders, several transportation modes often required to move a product, and customs regulations to comply with, shippers have many details to address before a shipment is loaded on a vessel. Enter Incoterms. These rules serve as a guidebook for many aspects of global cargo transportation, but are primarily designed to address the obligations of

+ Nagel. “They also clearly dene the cost and risk responsibilities for both the seller and the buyer, in addition to assigning responsibility for customs clearance, rst- and last-mile delivery, and insurance coverage.” The International Chamber of Commerce rst published Incoterms in 1936, and update the rules approximately every ve years. The most recent changes were made in 2020.

the seller and the buyer of a shipment relative to cost and risk throughout the process leading up to cargo being loaded and while in transit. WHY USE INCOTERMS? “Incoterms allow for standardized technology and eliminate the risk of inconsistencies in language terms,” says Phil Denning, vice president of U.S. sea logistics and operations for Kuehne

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