📦 Incoterms® – The Common Language of International Trade
"Who would have thought that a collection of three-letter abbreviations would have such an impact on the development of international (and domestic) trade transactions? We can thank a group of industrialists, financiers, and merchants whose determination to pursue post-World War I economic recovery ultimately led to the founding of the International Chamber of Commerce (ICC). Since no global rulebook for trade existed, these businesspeople saw the opportunity to create an industry standard that would later become known as the Incoterms® rules."
🌍 What Is Incoterms®?
Incoterms® (International Commercial Terms) is a set of trade rules developed by the International Chamber of Commerce (ICC) and used worldwide. Each three-letter abbreviation precisely defines the responsibilities of the seller and the buyer in the sale of goods.
Among other things, the rules define:
- when risk passes from the seller to the buyer;
- who bears the costs of transport;
- who handles export and import customs clearance;
- who arranges insurance, and who is responsible for each stage of transport.
📖 The Evolution of Incoterms®
The ICC published the first Incoterms rules in 1936. Since then, the system has been revised several times to keep pace with ongoing changes in international trade and logistics. The currently valid Incoterms® 2020 rules define the points of responsibility and cost allocation in line with the needs of modern freight forwarding.
⚙️ Why Does It Matter?
International trade often brings together the differing legal and business practices of different countries. Incoterms® provides a uniform interpretation that:
- clearly defines the obligations of the seller and the buyer;
- reduces the potential for misunderstandings and legal disputes;
- makes contracting easier;
- makes international shipment of goods safer and more predictable.
Today, Incoterms® rules are applied in nearly every country in the world, making them the common language of international trade.