Incoterms 2020 – The Key to Success in International Trade
In international trade, knowledge of Incoterms (International Commercial Terms) is not just useful—it is essential. Developed by the International Chamber of Commerce (ICC), Incoterms 2020 precisely define the responsibilities of the seller and buyer at every stage of goods delivery. They help avoid costly mistakes and disputes resulting from unclear contract terms.
Why Are Incoterms 2020 Crucial?
Incoterms clearly define who is responsible for transport, insurance, customs formalities, and when the risk is transferred to the buyer. While they do not replace trade contracts, they serve as a crucial supplement that streamlines logistics and minimizes the risk of misunderstandings.
A lack of knowledge about Incoterms can lead to unnecessary costs, delays, and complications—especially in international trade, where customs regulations vary from country to country.
Key Incoterms 2020 Rules – Which One to Choose?
The most commonly used Incoterms in business practice include:
EXW (Ex Works) – The seller makes the goods available at their premises, and the buyer is responsible for transportation and customs formalities. This ensures full control over logistics but requires advanced transport organization.
FCA (Free Carrier) – The seller delivers the goods to the carrier and is responsible for loading. The buyer organizes the onward transportation. This is often used in land and air transport.
DDP (Delivered Duty Paid) – The seller bears all costs, including delivery, duties, and taxes, simplifying the import process for the buyer.
FOB (Free On Board) – Common in maritime trade. The seller is responsible for loading the goods onto the ship, after which the risk transfers to the buyer.
CIF (Cost, Insurance, and Freight) – Similar to FOB but additionally includes insurance and freight to the destination port.
Practical Example – Transport of Cranes to Brazil
At KADOR, we managed the transport of two containers with cranes from Poland to Brazil under the CIF (Cost, Insurance, and Freight) rule. We provided road transport from Świdnica to the port of Gdańsk, followed by sea transport to Rio de Janeiro. Our responsibility ended when the goods arrived at the destination port.
The buyer was then responsible for receiving the goods, transporting them to the final location, and returning the empty containers to the shipping company, as CIF does not cover these steps.
Benefits of Understanding and Using Incoterms
- Clear allocation of responsibilities – Each party knows its role, reducing the risk of disputes.
- Cost optimization – Choosing the right rule helps avoid unnecessary expenses, such as customs clearance fees.
- Risk reduction – Precisely defining the transfer of risk prevents confusion in case of damage or loss.
- Compliance with international standards – Incoterms provide a common language for trade, facilitating cooperation with foreign partners.
Risks of Not Knowing Incoterms
- Unexpected costs – Additional charges for customs, insurance, or storage.
- Delivery delays – Poorly defined transport responsibilities can prolong the shipment process.
- Legal disputes – Unclear terms may lead to conflicts or even legal proceedings.
How to Choose the Right Incoterm?
- Mode of transport – FOB and CIF are commonly used in maritime shipping, while FCA and DAP are preferred for land and air transport.
- Scope of responsibility – Companies with well-developed logistics choose EXW for full control, while those seeking lower risk prefer DDP or DAP.
How KADOR Supports Clients in Incoterms-Compliant Deliveries
KADOR offers comprehensive delivery services based on Incoterms 2020, tailored to individual client needs. Our services include:
- Industrial packaging – Our specialized export packaging ensures goods’ safety in maritime, air, and land transport.
- Loading and unloading – We guarantee safe cargo handling according to Incoterms requirements.
- Container stowage – Secure placement of goods in containers, essential for maritime transport (e.g., FOB, CIF).
- Transport to terminals – We organize transport to sea, air, and rail terminals, including CPT shipments.
- Customs clearance support – We cooperate with customs agencies to facilitate smooth formalities in DDP shipments.
- Air freight handling – As a registered agent in KADOR Gliwice, we conduct security checks outside airports, speeding up air shipments.
Conclusion
Understanding and applying Incoterms 2020 is key to effective international logistics management. Choosing the right rule helps avoid problems, optimize costs, and increase transaction security.
KADOR supports clients in Incoterms-compliant deliveries, offering comprehensive transport and logistics services. Contact us to learn how we can streamline your shipments.
