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Everything You Have Always Wanted to Know About Incoterms

Posted on September 16, 2013

Conceptual image of international logistics, featuring a docker, Incoterms may not be a glamorous topic, but they deserve some love!

Incoterms rules, short for 'International Commercial Terms', govern international transactions, including shipping, and are defined by the International Chamber of Commerce. They clarify who, seller or buyer, is responsible for goods at which point of a journey, and insuring them.

They have been widely adopted by legal authorities, governments and companies around the world as they eliminate the risk of incorrect interpretation of the legislations of different countries, and reduce potential disputes.

"What does it have to do with me?", you may ask. When it comes to shipping your vehicle, not being clear about your Incoterms could mean that your car isn't covered for some parts of the journey or that you are waiting for your vehicle at home, when you have, unbeknownst to you, agreed to collect it at the port!

Of course, it is unlikely that it would come to that, as a good shipping company should guide you through this maze, but understanding Incoterms will help you at every stage, from assessing a quote correctly to getting adequate insurance for your vehicle.

There is about a dozen Incoterms used in international trade, but you are more likely to come across the following ones:

Free on Board (FOB)
The shipping company will pay for the transportation of your vehicle to the port of shipment and loading it. You are responsible for organising and paying for marine insurance, and transportation from the port of destination.

Cost, Insurance and Freight (CIF)
In this case, the shipping company will be responsible for transporting your car as well as organising marine insurance. If possible, try to find a shipping company who offers this option, as it is by far the easiest solution for you.

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