An introduction to Incoterms

Short for International Commercial Terms, Incoterms are a set of standard trade terms that are used in sales contracts and internationally recognised.

Also sometimes known as International Shipping Terms, the purpose of Incoterms is to ensure that both the buyer and seller know important facts about the sale and avoid costly misunderstandings by ensuring that all tasks and costs are properly delegated.

The first set of Incoterms was published in 1936. Over the years, they have been developed and maintained by the International Chamber of Commerce (ICC) and the latest collection, Incoterms 2010, came into effect on January 1st 2011.

Whether you're an importer, exporter or otherwise involved in the process - a broker, consultant, transporter, insurer or consultant, for instance - it's important to understand the rules and definitions set out by the various Incoterms and know how they affect your role in the import/export process.

Incoterms are comprehensive and very complex, so the best way to ensure you get all the details is to obtain a copy of the complete document from the ICC. Training is also available to help you understand the rules.

There are 11 different Incoterms rules, and each of these defines whether it is the buyer or seller who is supposed to deal with issues such as customs declarations, arranging and paying for transport, unloading of goods, insuring the consignment and paying import taxes.

The first seven rules will work with any mode of transport. They are:
• EXW - Ex works
• FCA - Free carrier
• CPT - Carriage paid to
• CIP - Carriage and insurance paid to
• DAT - Delivered at terminal
• DAP - Delivered at place
• DDP - Delivered duty paid
There are also four categories that are specific to consignments transported over water - either by sea or inland waterway. These are:
• FAS - Free alongside ship
• FOB - Free on board
• CFR - Cost and freight
• CIF - Cost, insurance and freight

Please be careful of these incoterms when negotiate with suppliers from Alibaba.com or other platform to avoid any misunderstanding of the orders.

I will try to provide more experience about Purchasing in Alibaba.com or the Alibaba.com App, hope it will help for your international trade.