What are Incoterms?

Incoterms (International Commercial Terms) are an international standard defining the conditions of goods delivery in international trade. They establish the division of responsibility between the seller and the buyer in terms of:

• transport
• insurance
• costs
• customs formalities
• risk

The International Chamber of Commerce (ICC) created these rules to streamline global trade and avoid misunderstandings. The first Incoterms rules were published in 1936 and are regularly updated. The currently applicable version is Incoterms 2020.

Why are Incoterms important in maritime shipping?

• clear responsibilities: they define who is responsible for transport, insurance, and customs duties, specifying when risk transfers from the seller to the buyer
• time savings: they eliminate the need to renegotiate terms for each transaction
• risk reduction: they help avoid legal and financial disputes

Incoterms are divided into two main groups: rules applicable to all modes of transport and rules specifically for maritime and inland waterway transport.

Incoterms were created to standardize trade transactions and define the transfer of risk and cost responsibility. Their updates occur approximately every 10 years due to changes and innovations in global markets. However, nothing prevents clients in 2025 from signing a contract under Incoterms 2010.

Incoterms 2010

Incoterms 2020

How to choose the right Incoterms rule?

1. Determine the type of transport: Is it maritime, air, rail, or multimodal transport? Example: For maritime transport, rules such as FOB or CIF may be more suitable.

2. Define responsibilities and risks: Consider who should be responsible for transport costs, insurance, and customs formalities.

3. Consult with your trade partner: Decide which rule best suits both parties.

4. Consider local regulations: In some countries, certain rules may be more common or even required.

Most commonly used Incoterms rules

• EXW: Minimal seller responsibility – ideal for beginner exporters.
• FOB: A popular rule in maritime trade where the seller is responsible for loading onto the ship.
• CIF: Facilitates transportation for the buyer since the seller handles both freight and insurance.
• DDP: Convenient for the buyer, as the seller covers all delivery costs.

Incoterms are an essential element of international trade, facilitating cooperation between exporters and importers. By clearly dividing responsibilities, business partners avoid misunderstandings and additional costs. Choosing the right Incoterms rule depends on the type of transport, the level of risk, and the obligations that both parties are willing to assume.

If you need help selecting the right rule or want to learn more, contact our experts – we will organize your transport in accordance with Incoterms principles!