What Are Incoterms®?
Incoterms® (International Commercial Terms) are internationally recognized trade rules published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers in international transactions.
Incoterms® clarify which party is responsible for transportation, insurance, export procedures, import procedures, costs, and the transfer of risk during the shipment of goods.
Using the correct Incoterms® rule helps prevent misunderstandings and supports smoother international trade.
Why Are Incoterms® Important?
Incoterms® help businesses:
- Clearly define buyer and seller responsibilities
- Reduce commercial disputes
- Improve logistics planning
- Clarify transportation costs
- Determine the transfer of risk
- Facilitate international contracts
Although Incoterms® do not replace sales contracts, they form an essential part of international trade agreements.
Incoterms® 2020 Rules
The current version includes 11 trade terms, divided into two categories.
Rules for Any Mode of Transport
- EXW – Ex Works
- FCA – Free Carrier
- CPT – Carriage Paid To
- CIP – Carriage and Insurance Paid To
- DAP – Delivered at Place
- DPU – Delivered at Place Unloaded
- DDP – Delivered Duty Paid
Rules for Sea and Inland Waterway Transport
- FAS – Free Alongside Ship
- FOB – Free On Board
- CFR – Cost and Freight
- CIF – Cost, Insurance and Freight
Each rule allocates costs and risks differently between the buyer and the seller.
What Do Incoterms® Define?
Incoterms® specify:
- Delivery point
- Transfer of risk
- Transportation responsibilities
- Export customs responsibilities
- Import customs responsibilities
- Insurance obligations
- Allocation of transportation costs
They do not determine payment methods, ownership of the goods, or dispute resolution procedures.
Choosing the Right Incoterm®
The appropriate Incoterms® rule depends on several factors, including:
- Type of goods
- Transportation method
- Commercial relationship
- Country of destination
- Logistics capabilities
- Risk management strategy
There is no universally “best” Incoterm® for every shipment.
Common Mistakes
Businesses sometimes experience problems because they:
- Choose the wrong Incoterms® rule
- Misunderstand the transfer of risk
- Assume insurance is always included
- Ignore import customs responsibilities
- Use outdated trade terms
- Fail to specify the exact place of delivery
Understanding each rule before signing a contract is essential.
Incoterms® and Customs Clearance
Although Incoterms® define commercial responsibilities, customs procedures are still governed by the customs legislation of each country.
Businesses should ensure that:
- Customs documentation is complete
- Responsibilities are clearly assigned
- Transportation arrangements match the agreed Incoterm®
- Import and export procedures are properly coordinated
Good planning helps avoid unnecessary delays.
Why Professional Trade Advice Matters
Experienced customs and logistics professionals can help businesses:
- Select appropriate Incoterms®
- Review international contracts
- Coordinate customs procedures
- Improve logistics planning
- Support trade compliance
- Reduce commercial risks
Professional guidance helps businesses make informed decisions before goods are shipped.
Why Choose Online Gümrük?
Online Gümrük provides customs brokerage, international logistics, and trade consulting services for companies trading with Turkey.
Our services include:
- Customs brokerage
- Import customs clearance
- Export customs clearance
- Incoterms® guidance
- Trade compliance consulting
- International freight coordination
- Customs documentation support
Our experienced team helps businesses structure international shipments efficiently while complying with Turkish customs regulations.
Conclusion
Incoterms® 2020 are an essential part of international trade, helping buyers and sellers clearly define their responsibilities throughout the shipping process.
By selecting the appropriate trade term and coordinating customs and logistics effectively, businesses can reduce misunderstandings, improve operational efficiency, and strengthen international commercial relationships.
Frequently Asked Questions
What are Incoterms®?
Incoterms® are internationally recognized trade rules that define the responsibilities of buyers and sellers in international transactions.
How many Incoterms® 2020 rules are there?
There are 11 Incoterms® 2020 rules, covering different transportation methods and commercial arrangements.
Do Incoterms® determine ownership of goods?
No. Incoterms® define responsibilities, costs, and the transfer of risk, but they do not determine ownership or payment terms.
Which Incoterm® is the best?
There is no single best Incoterm®. The appropriate rule depends on the shipment, transportation method, commercial agreement, and the responsibilities agreed between the buyer and seller.
Can Online Gümrük help businesses choose the right Incoterm®?
Yes. Online Gümrük provides customs brokerage, trade consulting, logistics coordination, and Incoterms® guidance for businesses involved in international trade with Turkey.