International Commercial Terms (Incoterms)

International Commercial Terms, or Incoterms, are standardized trade terms used in international agreements to clarify the responsibilities of buyers and sellers in shipping goods. These terms define who pays for transportation, insurance, and taxes, as well as when the risk of loss or damage shifts from the seller to the buyer. Common examples include "FOB" (Free on Board), meaning the seller covers costs until goods are on board a ship, and "CIF" (Cost, Insurance, Freight), where the seller pays for transportation and insurance. Understanding Incoterms helps ensure smooth international trade.