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Incoterms: Definition and important aspects for buyers
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Inkoterms in a nutshell:
Incoterms are internationally standardized commercial clauses that regulate the rights and obligations between buyer and seller in the delivery of goods. For purchasing, they are an essential tool for clearly defining costs, risks and responsibilities in international supply contracts.
Example: In the case of a delivery of electronic components from China to Germany under "CIF Hamburg" (Cost, Insurance, Freight), the supplier bears all costs up to the port of destination Hamburg, including insurance, while the buyer assumes responsibility for unloading, customs clearance and onward transportation from there.
Contents
What are Incoterms?
The Incoterms (International Commercial Terms) are globally recognized standardized trade terms developed by the International Chamber of Commerce (ICC). They clearly define the responsibilities of buyers and sellers in the international trade of goods. This includes the regulation of delivery, transfer of risk, transportation costs and insurance. By applying the Incoterms, misunderstandings and legal disputes are avoided by reaching clear agreements on obligations and risk management.
Core elements of the Incoterms
Significance for purchasing
Incoterms are a key tool for buyers in the international procurement process. They enable secure planning and execution of transactions by creating transparency about costs and risks. By using Incoterms correctly, buyers can efficiently design supply chains, optimize costs and strengthen supplier relationships.
Incoterms: From individual agreements to global standards
Building on the theoretical basis of Incoterms, it is essential to use standardized trade terms in practice. In the past, individual contractual clauses in international trade often led to misunderstandings and disputes. The need for a transformation towards globally uniform regulations became clear in order to minimize risk management and ensure efficient processes in the supply chain.
Old: Individual contractual clauses
Traditional approach: In the past, delivery terms were often negotiated individually between buyer and seller. These customized agreements led to a high level of complexity, as each party introduced its own terms and interpretations. They were characterized by extensive contract negotiations and a lack of standardized terms. This often caused uncertainty regarding responsibilities for transportation, insurance and customs formalities. Challenges such as language barriers and different legal frameworks increased the risk of misinterpretation and conflict, making the trade process inefficient and time-consuming.
New: Application of the Incoterms
International Commercial Terms: The modern approach relies on the use of Incoterms, which have been standardized by the International Chamber of Commerce. These globally recognized clauses clearly define the obligations, costs and risks of buyer and seller. With updates such as Incoterms 2020, adjustments have been made to reflect current trading practices. Innovations include the consideration of multimodal transportation and digital documentation. Practical benefits include increased legal certainty, simplified contract drafting and rapid clarification of responsibilities. Companies benefit from more efficient processes, reduced transportation costs and lower risks in international trade.
Practical example: Efficient supply chains in mechanical engineering
A German mechanical engineering group imports components from China using the Incoterms DDP (Delivered Duty Paid). By clearly stipulating that the supplier bears all costs and risks up to the named place, the company was able to reduce its stock levels by 20%. Delays in delivery were reduced by 30% as customs clearances ran more smoothly. Overall, the use of Incoterms resulted in cost savings of over 1 million euros annually and strengthened relationships with international suppliers through transparent and standardized terms and conditions.
Conclusion on Incoterms
Incoterms are indispensable tools for successful international purchasing. They not only create legal certainty and transparency in global procurement, but also enable strategic optimization of costs and risks. The correct selection and application of Incoterms requires sound specialist knowledge and careful analysis of the specific trading situation. In view of increasing digitalization and sustainability, Incoterms will continue to play a central role in the design of efficient and sustainable supply chains in the future.
