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Blog
Should we use Incoterms in the United States?
March 3, 2008
Incoterms (International Commercial Terms) developed by the International Chamber of Commerce (ICC), are a uniform set of rules to clarify the costs, risks, and obligation of buyers and sellers in the international commercial transactions. Because they address issues relating to import and export, the Incoterms are most appropriate for use in international shipping.
When studying Incoterms in an MBA program a few years ago, it was looked at as the thing for the future. It would spread to use in the United States and we would do away with the old UCC terms. Is this like the same scare they gave all of the manufacturers in the United States a few years ago that all measurements would have to be metric.
Many multi-national organizations have adopted the use of incoterms exclusively, whether for domestic or international transactions. With more and more international business, would it not be better if we were all on the same page.
The ICC recommends that “Incoterms 2000” be referred to specifically when ever the terms are used, together with the location.
EXW EX Works (named place)
FCA Free Carrier (named place)
FAS Free Alongside Ship (named loading port)
FOB Free on Board (named loading port)
CFR Cost and Freight (named destination port)
CIF Cost, Insurance and Freight (named destination port)
CPT Carriage Paid To (name destination port)
CIP Carriage and Insurance Paid To (named destination port)
DES Delivery EX Ship (named port)
DAF Delivered at Frontier (named place)
DDU Delivery Duty Unpaid (named destination place)
DDP Delivery Duty Paid (names destination place)
Destination is the exact place and the frontier to which delivery is to be made.
Refer to ICC web site at www.iccwbo.org/incoterms/ for information about these terms and their definitions which are copyrighted by the ICC. They have an excellent wall chart that you can buy for a small fee.
One of the most interesting classes I have taken was a study on Uniform Commercial Code (UCC) used in the United States and the United Nations Convention on Contracts for the International Sale of Goods (CISG). A lot of this information is included in a contracts class. If you are moving in to the international scene, it is well worth your time.
Posted by Mary Walker on March 3, 2008 | Comments (2)
In response to: Should we use Incoterms in the United States?
Charles Dominick, SPSM commented:
As someone who trains purchasing and supply management professionals from around the world, I definitely feel that INCOTERMS should be adopted here in the states. It is confusing to students when they have to learn what is used in the entire world and then learn what is used in the US only!
In response to: Should we use Incoterms in the United States?
Mary commented:
I have studied both and I agree it is very confusing with two sets of terms. I don't have the opportunity to work with international shipments however the incoterms seem well defined. As more and more business is going to different countries, it seems that we would one day soon have to move to the same standards.