Incoterms: the basis of International Trade and Logistics

What they are, why they matter, and how Alliance Multimodal works with them.

In international trade, precision is everything.

Even the slightest misunderstanding between a seller and a buyer can lead to border delays, financial losses, or even a breakdown of the deal.

To minimize such risks, Incoterms—international commercial terms—were introduced in 1936 and have since become a crucial component of all cross-border contracts.

Alliance Multimodal, a provider of multimodal transportation along the Middle Corridor routes, strongly advises carefully selecting the appropriate Incoterms for every transaction involving the physical movement of goods across borders.

What Are Incoterms?

Incoterms (International Commercial Terms) are a globally recognized set of rules developed by the International Chamber of Commerce (ICC) that define the responsibilities of sellers and buyers in the delivery of goods.

These terms govern:

• Allocation of transportation costs
• Responsibility for cargo insurance
• Obligations for customs clearance
• The point of risk and responsibility transfer

It is important to understand that Incoterms are not a contract or a payment method—they are simply a part of the delivery terms included in a sales agreement.

 A Brief History: 1936 to 2020

The first version of Incoterms was introduced in 1936.

Since then, the rules have been revised to reflect changes in global trade, logistics practices, and technologies:

• 1953–1980: Adapted to the needs of rail and maritime transport
• 1990–2000: Adjustments due to the rise of containerization and multimodal transport
• 2010: New terms introduced for more complex logistics chains
• 2020: Updated insurance terms and the inclusion of last-mile delivery and electronic bills of lading

Structure of Incoterms 2020

The 2020 edition of Incoterms includes 11 terms, categorized by transport type:

For all modes of transport:

• EXW (Ex Works) — Pickup at the seller’s premises
• FCA (Free Carrier) — Delivered to the carrier
• CPT (Carriage Paid To) — Transport costs paid to the named place
• CIP (Carriage and Insurance Paid To) — Transport and insurance paid to the named place
• DAP (Delivered at Place) — Delivered to destination
• DPU (Delivered at Place Unloaded) — Delivered and unloaded
• DDP (Delivered Duty Paid) — Delivered with import duties paid

For sea and inland waterway transport only:

• FAS (Free Alongside Ship) — Delivery alongside the vessel
• FOB (Free On Board) — Delivery on board the vessel
• CFR (Cost and Freight) — Cost and freight paid
• CIF (Cost, Insurance and Freight) — Cost, insurance, and freight paid

We will cover each Incoterm in more detail in the following publications..

For multimodal shipments—especially via the Middle Corridor (Europe → Turkey → Georgia → Azerbaijan → Kazakhstan → Uzbekistan → China)—selecting the right Incoterm is critical.

Real-World Examples:

• FCA – Turkey (Mersin Port):
  The seller delivers the cargo to a warehouse in Mersin. From there, Alliance Multimodal arranges container or truck transportation across the Caucasus to Central Asia.

• DAP – Almaty (Kazakhstan):
  A European exporter assigns the entire delivery process to Alliance Multimodal, from sea freight coordination to overland trucking via Azerbaijan and the Caspian Sea, all the way to the buyer’s door in Almaty.

How to Choose the Right Incoterm?

When choosing the best term for your transaction, consider:

• The logistics capabilities of both parties
• Customs regulations of the involved countries
• The mode and route of transport
• The desired level of control over the shipment

Alliance Multimodal offers expert consultations on Incoterm selection—based on route, cargo specifics, and legal conditions in transit and destination countries.

Conclusion

Incoterms are the language of global trade. Without them, it’s nearly impossible to build transparent and reliable logistics partnerships.

For companies operating between Europe and Asia, selecting the right Incoterm and working with a knowledgeable logistics partner is essential.

At Alliance Multimodal, we are more than just a freight forwarder. We are your trusted guide through the complexities of international delivery—and understanding Incoterms is key to successful, safe, and cost-efficient logistics.

Contact our team—we’ll help you define the optimal delivery terms and support your entire international transaction from start to finish.