TM Forum Community

  • 1.  Importance of Incoterms

    TM Forum Member
    Posted Mar 04, 2019 05:12

    I believe that parties in international trading/shipping should keep awareness and their eyes on three elements/points which is the risk, responsibilities and ownership and where it is begins and ends . Indeed that contract is sufficient to ensure all parties maintain their obligations in international trade . But the language barriers and connotations may not reflective or well understood in place to another between the parties .

    Therefore , by using of Incoterms eliminates discrepancies in language by giving same definition of specific terms within a trade agreement for all parties .

    The trade "Incoterms" or "International Commercial Terms" were established and published by International Chamber of Commerce (ICC). The aim to organize and standardize a common trade language between all parties, specifically between the seller and the buyer in purpose of clarifying the responsibilities, tasks, costs, charges and risks involved in the delivery of goods from sellers to buyers . And avoid misunderstandings or any mislead in handling goods between Importers and exporters .

    The accurate practice of the Incoterms rules is sustaining the legal certainty upon which mutual confidence among business partners must be based . So, beside that incoterms are universal terms, essentially they are guidelines for the seller and buyer to understand where require to arrange pick up goods, delivery, freight, insurance, customs duties and final delivery destinations. For both importers and exporters, Incoterms will clarifying the responsibilities, risks and logistics requirements of each of them.

    Therefore, by including the Incoterms rule and incorporating them into the sales contract/purchase order, it will be clear at any stage of the shipping and delivery phase that the ownership of the goods will be legally and reliably transferred from the seller to the buyer and a thorough understanding of what each party must do, In case of loss, damage or other accidents.

    Furthermore , I must explain here that beside include the incoterms in contracts . I think it`s more important that parties in international trading/shipping understand incoterms very well .

    Misunderstand or misused desired incoterms will certainly lead to a series of problems through all subsequent of the supply chain . starting from pick-up schedules, delivery lead-time and most vital dramatically will disrupts the flow of goods and damages a given company's reputation. Alongside, incoterms define monetary payments. So Incoterms are essential to ensuring proper timely payment of goods .

    * Thought you might be interested in seeing this :

    Importance of Incoterms


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    Understanding Incoterms


    Zuhair Faronia
    STC Solutions

    DT Asia