Incoterms: clear agreements for international transactions
When buying or selling goods it’s always advisable to include Incoterms in the contract. These Incoterms determine who is responsible for which part of the logistics chain and what agreements must be respected. As an experienced transport company we are familiar with the various Incoterms and the specific obligations they entail.
What are Incoterms?
Incoterms is a designation for international commercial terms. It is a set of rules that determine who is responsible for what happens during international transactions. This is not limited to the tasks as such, but also includes the costs, risks, insurance and general responsibilities.
By agreeing Incoterms between buyer and seller, the following issues are settled:
- Who is responsible for arranging transport insurance, permits and other formalities?
- Who is responsible for transport and what is the delivery point?
- When do the risks and delivery costs pass from the seller to the buyer?
How many Incoterms are there?
There are 11 Incoterms, of which 4 are specifically intended for water transport. The most common Incoterms in our industry are EXW, DAP and DDP.
EXW – Ex Works (factory)
With the EXW Incoterm the buyer is responsible and foots the bill for transport, insurance, customs clearance and any other costs and risks from the moment the goods are collected from the seller. The seller must ensure the buyer has access to the goods, in his warehouse or office.
DAP – Delivered At Place
DAP determines that the seller is responsible for the delivery of the goods to an agreed place of destination without bearing the risks of any further costs or risks of import.
If you use the DAP Incoterm it is advisable to call on an experienced transport or logistics company that can help you set up the transport, customs clearance and other logistics aspects to guarantee a smooth delivery process.
DDP – Delivered Duty Paid
DDP determines that the seller is responsible for the delivery of the goods to an agreed place of destination, including payment of all further costs and formalities as well as customs duties and taxes.
With the DDP Incoterm the seller also bears the risk of loss or damages to the goods until delivery at the agreed place of destination. After delivery at the agreed place of destination all risks and responsibility are transferred from the seller to the buyer.
Benefits of Incoterms
Although the use of Incoterms is not mandatory, they are recognised worldwide and commonly used in international commercial transactions. They are frequently adjusted by the International Chamber of Commerce (ICC) to reflect changes in commercial practices and industry needs.
The benefits? Incoterms provide a transparent framework for the division of responsibilities, risks and costs between buyer and seller. They make it clear for both parties what obligations they must fulfil in terms of transport, insurance, customs clearance and other aspects of international commerce.
Incoterms at Record-Trans
As an experienced transport company we are familiar with the various Incoterms and the specific obligations they entail. We work close with you, the client, to understand your needs. Based on the Incoterm you choose, we advise you on the best way of making the necessary arrangements.
Moreover, we make sure our transport services fit in seamlessly with the chosen Incoterm. Whether it’s organising transport, handling customs formalities or providing the necessary documentation, we make sure all aspects of the transport process are in accordance with the agreed Incoterm.