Incoterms: The Foundation of Every Successful International Negotiation

Incoterms are international rules defining responsibilities between buyers and sellers in global trade transactions. Understanding these terms isn't optional, it's fundamental to protecting your commercial interests. 📋

What are Incoterms?

They're standardized codes by the International Chamber of Commerce specifying who assumes costs, risks, and responsibilities at each stage of international transport. From factory departure to final delivery, each Incoterm clearly distributes obligations.

Most Used in Maritime Trade

FOB (Free On Board) means the seller delivers goods aboard the vessel. From that moment, the buyer assumes all risks and costs. It's common when the buyer has greater logistics control. 🚢

CIF (Cost, Insurance and Freight) indicates the seller pays transport and insurance to destination port, though risk transfers upon sailing. It provides buyers greater peace of mind about initial costs.

EXW (Ex Works) represents minimum obligation for the seller, who simply makes goods available at their facilities. The buyer handles all subsequent logistics.

Why They Matter in Your Operation

Choosing the incorrect Incoterm can generate costly misunderstandings about who pays what, who assumes risks during transit, and who manages customs procedures. These misunderstandings lead to commercial disputes, duplicate payments, or paralyzed merchandise. 💼

How to Select the Appropriate Incoterm

Consider your logistics experience, management capacity in foreign markets, relationship with commercial partner, and cost structure you prefer. Experienced buyers frequently prefer FOB for greater control. New buyers opt for CIF for simplicity.

At LOOP we advise on the most convenient Incoterm according to your specific operation, ensuring you understand exactly what responsibilities you assume. ✨