The incoterms are the terms related to international trade that were created in 1936 by the International Chamber of Commerce. This organization created these 13 terms to offer a way for companies from all countries to narrow the language barrier gap. The incoterms are designed to allow all shipping and international purchasing companies to understand the shipping terms regardless of the language in which the terms are given. The definitions of these terms have been modified several times over the years, with the last modifications made in the year 2010.

Advantages

One of the primary benefits is the simplification of contractual terms. When Incoterms exist, they are often used in commercial contracts, ensuring a single form of interpretation of the terms, saving time and money that was previously often wasted by misinterpretations of the contractual terms. In this way, the Incoterms have been an important tool for the development of international trade.

They offer a way for all companies that use terminology to understand its meaning. These terms help carriers and buyers understand the different types of situations that merchandise shipments involve. The incoterms allow buyers and carriers to understand who owns the goods at each stage of the shipment, as well as who pays the shipping costs. This advantage allows companies to avoid misunderstandings in all types of international maritime activities.

Disadvantages
One disadvantage is that many companies can not keep up with all the modifications that take place. This can leave some companies in an advantageous situation, and yet others at a disadvantage. Another problem with incoterms is that shipping companies and buyers have different preferences as to the terms they should use. Sellers often choose CIF because they have a better understanding of their shipments, buyers often choose FOB for the same reasons. These two types are the most used incoterms. This problem can be seen as an advantage or disadvantage depending on the perspective. Another disadvantage of incoterms is that many transport companies try to benefit from them. They often cite shipments using one method and purchases using another. The reason for this is to save money and gain more control over the merchandise.