I’m sure most of us at some point in our supply chain career, or at some stage in our lives, have heard of the term “Incoterms®” or “Incoterms® rules” being mentioned in a conversation. However, how many of us actually understand what the other person is talking about?

I remember the first time I had heard the term “Incoterms®”. It was about 2 years ago, in our company’s education department. Work colleagues were discussing a new Learnership that we recently took on-board; intrigued I listened in. With acronyms such as the “ICC”, “CIF” and “EXW” being thrown around, I felt as if I had missed the company memo on ‘how to sound intelligent during a work-related conversation’.

Needless to say, after asking a lot of (what seemed like at the time) silly questions, I came to the understanding that these seemingly daunting words had a fundamental meaning behind them, that they were a set of international trade terms stipulated and agreed upon in a contract of sale between a buyer and a seller, to provide clarity on the transferal of the risk, cost and responsibility of a specific transaction.

With that ‘aha!’ moment, I managed to get my hands on a copy of the manual and started to eat this elephant one bite-sized chunk of information at a time. I learned over the course of the next few days that these sets of rules were not as big of a monster that I, and most other people hearing it for the first time (or pretending to understand it), thought it was.

These rules have a vital role to play within the movement of goods both nationally and internationally, and should therefore be clearly understood and stipulated between the involved parties to reduce any costly misunderstandings and ruined relationships (as well as the chance of being caught with egg on your face).

Without having sufficient knowledge on the subject matter, these terms and rules can seem like a mammoth of a task to understand, let alone implement into any organisation. Mix in the words trade, international and contract into any sentence and it already sounds daunting, however with a little effort, this need not be the case.

If you enjoyed this blog, keep posted for some other interesting Incoterms® posts on the various rules, did you knows and interesting reads!