Your Guide to Understanding Incoterms

Incoterms are one of those things that most people will never hear about, yet still be able to lead a perfectly happy and fulfilling life! Of course, at McCullough, we can’t understand that as we live and breathe Incoterms, but if you are organising a shipment for the first time, whether for business or your own relocation, let us introduce you to what they are, as you will definitely need to understand them.

An abbreviation for ‘International Commercial Terms’, they are a set of rules for international transactions, shipping included, and define which party is responsible for goods, their transport and their insurance at which point of a journey, buyer or seller.

They are in force in most countries around the world as they remove the risk of incorrect interpretations of national vs international laws. As far as you are concerned, they matter hugely, as you could find yourself waiting in vain by the kerb for your shipping company to collect your car, for example, because you haven’t realised that you agreed to a port-to-port service.

Knowing your Incoterms will also be essential in comparing quotes.

There is a fair amount of Incoterms used in international trade, but here are the ones you are most likely to come across of:

Free on Board (FOB)

The shipping company will be responsible for getting your cargo from your door to the port of shipment and loading it. Organising and paying for marine insurance, is your responsibility, as well as arranging transportation from the port of arrival.

Cost, Insurance and Freight (CIF)

This option is often favoured by clients, as it is most comprehensive. In this case, the freight-forwarder will organise the transport of your car as well as marine insurance, giving you complete peace of mind.

For further information on vehicle shipping, contact us, phone us on +64 9 303 0075, or get a free quote.

Click here to see our reference guide to making car shipping stress free with our tried and tested 1-2-3 step process.