Incoterms: It pays to learn what this means

Incoterms: It pays to learn what this means article image

For companies new to import or export many of the terms and acronyms used in international freight can seem a bit like "double dutch."

For anyone shipping to or from Australia one of the crucial areas to understand (and many don't) is Incoterms – so you don't take on any undue risk or get hit with hidden costs!

Incoterms® 2010 are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC).

Incoterms® are used to define where ownership, risk and the responsibilities of buyers (generally importers) and sellers (generally exporters) transfer throughout the shipping process.

Before goods are shipped, the seller and buyer need to decide:

  • Who will arrange for carriage?
  • Who will pay for carriage?
  • Who will bear risk of loss or damage to goods?
  • Who is to be responsible for what? i.e. Sharing of tasks, costs and risks

The Incoterms® rules describe mainly the tasks, costs and risks involved in the delivery of the goods from sellers to buyers.

Obligations dealt with include clearance for export and import, packing of goods, arranging and paying for carriage and insurance, delivering and taking delivery of the goods, packaging, loading and unloading. Incoterms are not law, they are rules.

They do NOT deal with transfer of ownership (title), breaches of contract, exemptions from liability or the like.

Clear as mud? Check out this handy Quick Reference Guide which makes it easier for you to work out which Incoterm you should be using for your international shipments.

If you have any more questions on Incoterms give one of CargoHound’s freight experts a call on 1300 883 243 or email 

Ian Smith, CEO of CargoHound, Australia’s first online marketplace for international freight.


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