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Incoterms is the short form for International Commercial terms. These terms relates to the sales contract and are used worldwide. INCOTERMS were first introduced in 1936 by International chamber of Commerce (ICC). These Incoterms were revised several times, latest being Incoterms 2010.
Why do we need INCOTERMS ?
A cargo may move several days before it arrives at its destination. Even though shipping is safer these days, many cargoes still do not reach their destination or reach in bad shape. And when that happens, one should know who had the title of the goods lost. For that reason, It is important for buyer and seller to pre-define the responsibilities and obligations for transport of the goods. INCOTERMS are all the possible ways of distributing responsibilities and obligations between two parties.
These responsibilities and obligations include
Point of delivery: Incoterms defines the point of delivery of the goods by seller to buyer. The meaning of delivery here is"transfer of risk and responsibility". So the INCOTERMS defines the point of change of hands (passing of risk) from seller to buyer.
Transportation Costs: Incoterms defines which party pays for the transportation cost. There may be more than one means of transportation and INCOTERMS defines who pays for which leg of the transportation. ...
Why do we need INCOTERMS ?
A cargo may move several days before it arrives at its destination. Even though shipping is safer these days, many cargoes still do not reach their destination or reach in bad shape. And when that happens, one should know who had the title of the goods lost. For that reason, It is important for buyer and seller to pre-define the responsibilities and obligations for transport of the goods. INCOTERMS are all the possible ways of distributing responsibilities and obligations between two parties.
These responsibilities and obligations include
Point of delivery: Incoterms defines the point of delivery of the goods by seller to buyer. The meaning of delivery here is"transfer of risk and responsibility". So the INCOTERMS defines the point of change of hands (passing of risk) from seller to buyer.
Transportation Costs: Incoterms defines which party pays for the transportation cost. There may be more than one means of transportation and INCOTERMS defines who pays for which leg of the transportation. ...
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About Capt Rajeev Jassal
Capt. Rajeev Jassal has sailed for over 24 years mainly on crude oil, product and chemical tankers. He holds MBA in shipping & Logistics degree from London. He has done extensive research on quantitatively measuring Safety culture onboard and safety climate ashore which he believes is the most important element for safer shipping.
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