In the complex world of international trade, understanding Incoterms is essential for any logistics professional. These terms, established by the International Chamber of Commerce, define the responsibilities and costs of the parties involved in an international commercial transaction, including the importation of goods. In this blog post, we will explore the basics of import Incoterms and what you need to know to efficiently handle your import operations.
Incoterms, which stand for “International Commercial Terms”, are a set of internationally recognized rules that define the responsibilities and risks of the buyer and seller in an international trade transaction. These terms specify who is responsible for the costs and risks associated with the transportation and delivery of the goods, as well as at what point responsibility transfers from the seller to the buyer.
For logistics professionals involved in the import of goods, understanding Incoterms is essential to negotiate clear commercial contracts and ensure efficient supply chain management. By clearly setting out the responsibilities and costs associated with the transportation and delivery of goods, Incoterms help avoid misunderstandings and disputes between the buyer and seller.
Among the Incoterms most used for imports are:
EXW (Ex Works): The seller makes the goods available to the buyer at his premises, and the buyer is responsible for all costs and risks from that point onwards.
FOB (Free On Board): The seller delivers the goods on board the designated vessel at the specified port of shipment, and the buyer assumes the costs and risks once the goods are on board.
CIF (Cost, Insurance and Freight): The seller covers the costs and freight to bring the merchandise to the designated port of destination and takes out marine cargo insurance for the buyer.
DAP (Delivered at Place – Delivered in place): The seller delivers the goods to the designated place in the destination country, and is responsible for all costs and risks until delivery.
These are just some examples of Incoterms that are commonly used in import operations. Each term has specific implications in terms of responsibilities, costs and risks, so it is crucial to select the most appropriate one based on the needs and preferences of both parties. International Trade Terms are an integral part of logistics and play a crucial role in efficiently managing import operations. By properly understanding and applying these terms, logistics professionals can negotiate clear contracts, minimize risks, and ensure a smooth and efficient supply chain.
At Newtral México, we are committed to providing the knowledge and experience necessary to help you get the most out of your import operations. Contact us today to learn more about how we can optimize your import processes using the right Incoterms.
