Incoterms – International trade Standards

Incoterms are trade standards defined by the International Chamber of Commerce (ICC)
What are incomterms?

  • Define key elements of international contracts of sale
  • refelct the parties agreement to divide costs and risks betwenn parties
  • published by the International Chamber of Commers since 1936
  • abbreviation of International Commercial Terms (Incoterms)
  • Whats not: Does not cover transfer of ownership and other property rights
  • Whats not: intended to replace the sales contract

A supplychain consists of different Incoterm items. Several items are defined into different groups. For example there are incoterms for every step within a supply chain like “loading goods into the truck”, “truck is on the road”, “truck drives to airport”, “loading to airplane”, “airplane takes off”, “reloading from airplane to truck”, “delivery by truck to the customer”. Every item of the supply chain takes a individual risks, that has to be coverd by a person. This could be either the producer, which increases the price for the customer, or it could be coverd by the customer which increases the risk for him.

Big Point: Transportation is a risky process delivering goods. The company produces a product and owns it, but as they give it to a delivering company they might be not responsible for the products security any longer. In the end the customer recieves a product, that´s value has increased by covering several transportation risks. Maybe the good could be even to expensive for selling, by covering every risk of transportation!

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