INCOTERMS: What They Do--and Don't--Cover in Global Trade.

The article focuses on International Commercial Terms (Incoterms), standardized rules developed by the International Chamber of Commerce (ICC) that define the allocation of costs, risks, and responsibilities between buyers and sellers in global trade shipments. It explains the key Incoterms categories—seven for any transport mode and four specific to sea and inland waterways—and highlights their roles in clarifying risk transfer points, cost coverage, and obligations during shipping. The article emphasizes that Incoterms do not cover payment terms, ownership transfer, or contract breaches, and stresses the importance of selecting appropriate Incoterms aligned with shipping methods and letter of credit (LC) requirements to avoid disputes and payment issues. It also notes that economic and regulatory changes have influenced how credit professionals use Incoterms, underscoring the need for careful understanding and control of shipping documents to ensure smooth international transactions. [Extracted from the article]