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Incoterms is the abbreviation for the phrase "International Commercial Terms" , also known as International Commercial Terms. Proship.vn will update knowledge related to incoterms to answer questions: What is Incoterms? What stages did the history of incoterms formation go through? What is the meaning and role of Incoterms in current import and export business activities? And here we also suggest the most reliable address for sending export goods to International and European countries for your business.
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Ms Tien: 0909 986 247
Ms Dung: 0939 999 247
Ms Duy: 0902 581 247
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What are Incoterms? What are the rules of Incoterms?
Incoterms concept
Incoterms (abbreviation for "International Commercial Terms" ) is a set of rules explaining commercial conditions that reflect the actual delivery obligations between buyers and sellers in goods purchase and sale contracts. Incoterms correspond closely to the United Nations Convention on Contracts for the International Sale of Goods. Incoterms are known and implemented by all major trading countries.
Incoterms are only a part of the entire Export Contract. Incoterms do not say anything about the value of the goods, when payment will be made or the payment method that will be used in the transaction, and Incoterms do not replace any national law.
* Real-life example of referencing Incoterms into a contract: Company A in the US and Company B in Vietnam signed a sales contract with FOB Incoterms 2020 terms. The contract clearly states that the goods are delivered to the buyer. Shipping at Xuan Thuy port, Hai Phong on March 20, 2023 will refer to this clause in the contract as follows: [FOB – Xuan Thuy Port, Hai Phong – Incoterms 2020].
General rules of Incoterms
Incoterms have many different conditions, built on the principle of gradually increasing the seller's obligations during delivery, transportation, costs, risks, etc. for the parties to choose from. Specifically, those Incoterms rules are:
- Responsibility: Who does what? For example, who arranges transportation or insurance of the goods or who obtains shipping documents and export or import licenses;
- Risk: Where and when does the seller “deliver” the goods, or in other words, where and when does the risk transfer from the seller to the buyer;
- Costs: Which party must pay the costs, such as shipping, insurance, packaging, loading or unloading, and inspection or security-related costs.
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History of formation, role of Incoterms and reasons for having a new version of Incoterms
Next, Proship will present the history of the formation of incoterms, the role of incoterms in export and import activities as well as the reason for having a new version of incoterms. Specifically:
History of formation and development of Incoterms
The history of the formation of incoterms is summarized in an easy-to-understand way as follows:
- 1923: ICC begins research on commercial trade terms.
One of the first tasks of the ICC, after its creation in 1919, was to promote international trade, to do so it was necessary to understand the terms of trade that traders were using. This was done through a study of the six most common trade terms in 13 countries. The results of the study were published in 1923, which emphasized the differences and inconsistencies in the interpretation of the terms of trade.
- 1928: Clearer, brighter
To examine the explanatory differences identified in previous research, ICC launched a second study. This time the study has expanded to explain the terms of trade used in over 30 countries.
- 1936: A Guide for Global Entrepreneurs
Based on the research results, the first version of Incoterms released by ICC (with the symbol R in a circle – ®) was born. Incoterms 1936 terms include FAS, FOB, C&F, CIF, Ex Ship and Ex Quay.
- 1953: Freight transport by rail
Due to the impact of World War II, additional versions of Incoterms had to stop until the early 1950s. It was not until 1953 that the first version of Incoterms was reissued. Three new conditions have been added for non-sea transport: DCP, FOR and FOT.
- 1967: Correction of misinterpretation
The ICC releases the third edition of Incoterms addressing the misinterpretation of the previous edition. Two new conditions are added: DAF and DDP.
- 1976: Progress in air transport
The increase in air freight transport is the reason for the addition of a new Incoterms term, FOB Airport.
- 1980: The rapid increase of container shipping
The strong growth of containerized freight along with new document processing led to the need to add Incoterms. The new version has added the FRC (Free Carrier) condition, which stipulates for cases where goods are delivered at a location on shore, such as CY (Container Yard) rather than the ship's rail.
- 1990: Complete revision
The 5th edition of Incoterms has simplified Free Carrier conditions by removing all conditions related to each specific mode of transport, such as FOR, FOT, FOB Air Port. All of the above conditions can be replaced by FCA conditions (Free Carrier ... at named point: delivery of goods to the carrier at the designated location).
- 2000: Modification of customs clearance obligations
The “permits, authorizations and procedures” section in the FAS and DEQ conditions has been revised to conform to most common customs clearance practices.
- 2010: Reflecting the modernity of international trade
Incoterms® 2010 merges D conditions, removes DAF, DES, DEQ, DDU and adds DAT and DAP conditions. In addition, add the obligation of sellers and buyers to cooperate in sharing information and changes to make multiple sales in the journey (string sales).
- 2020:
This is the latest version, effective from January 1, 2020 with 11 rules: EXW (delivered at the factory), FCA (delivered to the carrier), FAS (delivered alongside the ship), FOB (delivered on ship). CPT (freight paid to), CFR (cost and freight), CIP (carriage and insurance paid to), CIF (cost, insurance and freight), DAP (delivered at destination), DPU ( delivered at unloaded location), DDP (delivered duty paid).
=> Thus, it can be seen that since the first publication until now, Incoterms has had 9 official versions including: Incoterms 1936, Incoterms 1953, Incoterms Incoterms 1967, Incoterms 1976, Incoterms 1980, Incoterms 1990, Incoterms 2000 , Incoterms 2010, Incoterms 2020.
Needless to say, Incoterms do not mention the following issues:
- Specifications and qualities of goods;
- Transfer of ownership of goods;
- Compensation due to breach of sales contract;
- Time, location, method and currency of payment;
- Consequences of delay or violation in the performance of contractual obligations;
- Reduce obligations or waive liability when unexpected or unforeseeable incidents occur;
- Embargo, intellectual property rights, place and method of dispute resolution...;
- Increase taxes, ban import and export,...
The role of Incoterms
In international goods transactions, Incoterms have the following 5 important roles:
- Considered an international language in transportation and delivery of foreign trade goods;
- Incoterms is a set of rules that help systematize international trade practices, commonly used around the world;
- It is an extremely important basis for businesses to determine prices for buying and selling goods;
- It is an important legal basis for resolving disputes and making complaints if any arise between sellers and buyers during the implementation of foreign trade contracts;
- It is a means to help speed up negotiations, drafting foreign trade contracts, organizing and implementing contracts.
Reasons for having a new version of Incoterms
With the 8th edition (Incoterms® 2010), ICC Incoterms have become a globally recognized and accepted standard rule. Incoterms are also widely used in international and domestic sales contracts around the world and have become the "bedside book" of traders in international and domestic trade transactions.
Celebrating the 100th anniversary of the birth of ICC and in order to meet the requirements of international trade practices in the digital technology age, ICC has organized the drafting, revision, supplementation and release of the new version Incoterms® 2020 Incoterms® 2020 was drafted by a Group of Experts, mainly from Europe, including for the first time representatives of China and Australia. The group has met periodically to discuss issues raised by the 150 countries that are members of the ICC. During the drafting process, the group proposed a number of amendments and supplements with the aim of providing a set of Incoterms rules that are simple, easy to understand, clear, correct and accurate, reflecting the dynamic reality of trade. international trade.
Proship needs to emphasize that Incoterms cannot replace all the terms and conditions required in a sales contract, therefore the above issues must be resolved by provisions in the contract and law. modify that contract. Incoterms are always and mainly applied in foreign trade, so they are called international trade terms. However, incoterms can also be applied in contracts for the sale of domestic goods. In cases where Incoterms are used in this way, license conditions and import/export procedures become unnecessary.
Shipping contact hotline:
Ms Tien: 0909 986 247
Ms Dung: 0939 999 247
Ms Duy: 0902 581 247
In import-export business, what does Incoterms mean?
The use of Incoterms in import and export business has many important meanings, including:
- Ensuring understanding and agreement between parties: The use of standard terms in Incoterms helps ensure that all parties involved in the transaction clearly understand and agree with the responsibilities and obligations during the transportation of goods. chemistry;
- Increase competition and business efficiency: The use of Incoterms helps increase competition and business efficiency in the field of import and export, because parties can carry out goods transportation transactions effectively and efficiently. meet customer requirements;
- Minimize disputes and risks: Using Incoterms helps minimize disputes and risks during the transportation of goods, because the terms are clearly defined and detailed about the responsibilities and costs incurred for each side.
=> In summary, the use of Incoterms in import-export business is very important to ensure understanding and agreement between parties, minimize risks, disputes and increase competitiveness and business efficiency in the export sector. import.
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Proship's target customers
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Goods received for export by rail container
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Information on International Union Railway freight train schedules
* Vietnam - China: Departure daily
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- Time: 3 days (excluding check-in time at border stations.
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- Time: 18 days (excluding check-in time at border stations).
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- Time: 23 days (not including check-in time at border stations).
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Railway freight train schedule information from Kep Station
* From Kep station, you can connect to 4 railway directions:
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2. Kep – Luu Xa (Thai Nguyen);
3. Kep – Ha Long (Cai Lan Port);
4. Kep – Yen Vien (Hanoi).
* The specific schedule is as follows:
- Transporting international freight on the route Kep - Dong Dang - Bang Tuong - Nam Ninh and vice versa: 2 shipments per day;
- Transporting domestic goods on the Kep - Yen Vien - Da Nang - Song Than route and vice versa: 1 shipment per day;
- Closed warehouse-warehouse freight transportation service.
Proship Logistics makes commitments to shippers
Proship's commitment to businesses and shippers:
- International intermodal rail transport rates are stable and competitive;
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Through the useful knowledge that Proship Logistics has shared above, import-export businesses that need to learn about the history of incoterms formation as well as the role of incoterms in business should save the information to effectively serve their customers. work...And when customers need to transport international rail containers on the route Vietnam - China - Mongolia - Kazakhstan - Russia - Europe quickly, safely and cheaply, please contact immediately 0909 344 247 for advice on the most optimal, economical, and effective transportation solutions.
Shipping contact hotline:
Ms Tien: 0909 986 247
Ms Dung: 0939 999 247
Ms Duy: 0902 581 247
