In a typical day like today – just in a second Amazon gets 18.5 orders globally.
On Singles day 2020, Alibaba got 583,000 orders per second.
It appears simple. In a click of a mouse we order an item to be delivered at our doorstep. But the logistics and supply chain which runs this seamless transit is far from simple.
International commerce has brought international trade forefront making the globe a common market and a common seller.
And many among us will be interested in an export opportunity!
Other than finding the right product, the key step to succeed in an export business is to understand one’s responsibility & liability in shipments/transportation.
And it is precisely where INCOTERMS come into limelight!
So, if you plan to ship a product, you should/ would not miss Incoterms Series!
Incoterms are internationally recognized terms in global trade which clarifies the responsibilities and the risk of transfer between the seller and the buyer when a sale of a good is involved.
Simply speaking it defines “Who pays for what?” in shipment or carriage of goods.
Incoterms 2020 is designated by International Chamber of Commerce, an institutional representative of more than 45 million companies in over 100 countries.
But why is Incoterms important?
Because when a good is sold, two parties who are commercially interested are involved – Seller & Buyer. And they need to clarify that “Someone” should take care of the transport between the two in a seamless way as possible.
‘Someone’ among them should take responsibility for
- Moving the goods
- Preparing/doing paper work or licenses
- Export/Import Declaration
- Paying duties at the import
- Take the risk if the goods get damaged or lost.
- And it should be legally valid.
What are Incoterms?
“Incoterms®” is an acronym standing for international commercial terms. They are the world’s essential terms of trade for the sale of goods.
It primarily clarifies two things in a buyer-seller relationship at critical points.
- Costs
- Risks
Based on this relationship, the functions of each Incoterm is defined. There are 12 critical points where the risk can transfer from the seller to the buyer in an international trade and the cost varies based on it.
Incoterms are in use since 1936 to make international commerce clear and better for different countries and languages. It simplifies and standardises the process.
In this Incoterm series we will look into the 11 Incoterms and how each of them is used in international trade.