Global Sourcing

Concepts
Understanding
Incoterms
What are Incoterms?

 International Commercial Terms, are three-letter trade terms established by the International
Chamber of Commerce to facilitate cross-border trade
 Since 90% of global trade runs on the oceans, it is not a surprise that some of the most used
Incoterms are maritime Incoterms
 The latest official publication by the International Chamber of Commerce(ICC) in 2020 includes 11
Incoterms
 Of those, four are meant for waterway transport only, the other seven can be used with any mode of
transport, including air freight.
 Aimed to guide buyers and sellers with the shipment process by determining the responsibilities of
each party during each leg of the transportation
Incoterms

Possibly the most important clause within an international contract of sale is that
which describes the terms of trade chosen between the seller and the buyer.

These identify the following issues for both parties in the movement of the goods:

Responsibilities of both parties and their service providers

 The division of risks between seller and buyer
 The division of costs between seller and buyer
Incoterms
CIF
EXW CFR DAP DDP

FOB

First
The Seller Carrier The Buyer

Loading Main Destination

Port Port
Carrier