What are Incoterms?
Incoterms are a set of standardized and globally recognized rules published by the International Chamber of Commerce (ICC). These terms clearly define the responsibilities, costs, and risks associated with the transport and delivery of goods between the buyer and seller in an international sales contract.
Elements regulated by Incoterms
Incoterms regulate three fundamental aspects of international transactions:
Risk Transfer
The exact point where responsibility for damage or loss passes from the seller to the buyer.
Cost Division
Who pays for the main transport, insurance, customs duties, and unloading costs.
Delivery Location
Where the goods must be delivered (e.g., at the factory, at the port, or at the customer's warehouse).
Common Examples
The most commonly used Incoterms in international trade:
EXW (Ex Works)
The buyer assumes almost all costs and risks from the seller's factory.
FOB (Free On Board)
The seller delivers the goods on board the ship. Very common in maritime imports.
DDP (Delivered Duty Paid)
The seller assumes full responsibility until delivery at the final destination, including customs.
Connection to WMS
The WMS must be prepared to generate specific documentation (such as the Packing List and gross cargo weight) according to the negotiated Incoterm, facilitating the work of the Freight Forwarder.