%201.svg){kind=small}
Latest posts
Download resources
Incoterms: Definition and important aspects for buyers
.jpeg)
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
Introduction to the Incoterms
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 risks.
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.
Application of Incoterms in purchasing
The targeted selection of the right Incoterm influences costs, risks and responsibilities in international trade. Purchasing professionals can thus optimize delivery terms and make clear arrangements with suppliers.
Example: FOB versus CIF for an order from China
Scenario:
A German company orders electronic components worth €100,000 from a supplier in Shenzhen, China. There are two Incoterms to choose from: FOB (Free On Board) Shenzhen and CIF (Cost, Insurance and Freight) Hamburg.
Analysis:
FOB Shenzhen: The seller assumes the costs and risks until the goods are loaded onto the ship in Shenzhen. From this point onwards, the buyer bears all further costs and risks.
CIF Hamburg: The seller bears the costs for freight and insurance up to the port of Hamburg. However, the risk is transferred to the buyer upon loading.
Decision:
The purchaser compares the total costs:
- At FOB Shenzhen he organizes the transport and insurance from Shenzhen himself. His own offers result in costs of €8,000 for freight and €1,000 for insurance.
- At CIF Hamburg the seller offers a flat rate of €10,000 for freight and insurance.
By choosing FOB Shenzhen and self-organization, the buyer saves €1,000. He also has control over the forwarders and can better coordinate delivery dates. He therefore opts for FOB Shenzhen.
Evaluation and strategic insights on Incoterms
✓ Critical success factors
→ Negotiation skills: In-depth knowledge of Incoterms regulations to optimize purchasing conditions and cost structures
→ Risk management: Strategic selection of clauses based on country risks and transportation routes
→ Process integration: Integrating Incoterms into digital purchasing processes and contract management systems
⚠ Challenges and limitations
→ Complexity management: different requirements depending on the means of transportation and destination country require flexible strategies
→ Cost intransparency: Difficult to compare total costs with different Incoterms options
→ Digitization gaps: Lack of integration into existing ERP systems makes automated processing difficult
Future trends and strategic implications:
"The evolution of Incoterms is increasingly being shaped by digitalization and sustainable supply chains."
→ Integration of smart contracts for automated processing
→ Increased consideration of CO₂ footprint in the choice of Incoterms
→ Development of new clauses for e-commerce and digital goods
→ Increased importance of transparency and traceability
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.
