Incoterms play a central role in international trade — yet in many procurement departments' daily operations, they remain an often underestimated lever. They not only determine who is responsible for transport, risk, or customs formalities, but also directly influence the cost structure and operational execution of procurement processes.

For mid-size industrial companies, it is therefore critical to understand the significance of Incoterms — and to leverage them strategically for procurement decisions.

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‍What Are Incoterms?

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‍‍Incoterms (International Commercial Terms) are standardized clauses for governing delivery conditions in international trade. They are published by the International Chamber of Commerce (ICC), most recently updated in 2020. The eleven currently valid Incoterms clearly define which party (buyer or seller) is responsible for transport, insurance, risks, costs, and customs processing — and at which point these responsibilities transfer.‍

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In procurement, they provide an internationally uniform contractual basis, reduce misunderstandings, and create transparency — provided they are correctly interpreted and consistently applied.‍‍

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‍Why Incoterms Matter for Procurement

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For procurement professionals, Incoterms are far more than legal footnotes. They influence concrete operational questions:‍

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• Who bears responsibility in case of damage during transport?‍

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• Which party handles customs clearance and is eligible for import tax credits?‍

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• Where do cost obligations begin and end from a procurement perspective?‍

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• How can potential additional costs from unclear responsibilities be avoided?‍

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Poorly chosen or unclearly defined Incoterms can lead to unexpected additional costs, logistical delays, or tax disadvantages — for example, if the buyer acts as the importer but has no access to import documentation.‍‍

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‍Examples: EXW, DAP, and DDP Compared

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‍‍A practical understanding of Incoterms starts with the three most commonly used clauses in B2B:‍

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• EXW (Ex Works): ‍
  ‍The seller makes the goods available, and the buyer assumes all obligations from the factory gate onward. Advantage: full control. Disadvantage: high logistical and customs effort for the buyer.‍

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• DAP (Delivered at Place):
  The seller arranges transport to the agreed-upon location, and the buyer only handles import clearance. This option offers a good balance of transparency and shared responsibility.‍

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• DDP (Delivered Duty Paid):
  The seller bears all costs and risks up to duty-paid delivery at the buyer's location. Convenient for procurement — but often associated with higher prices or hidden surcharges.

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Which option makes sense in a specific case depends heavily on internal resources, customs expertise, and the desired level of control in procurement.

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‍Impact on Customs Obligations and Cost Structure

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‍‍A particularly critical point in international procurement: Incoterms directly affect customs exposure and import tax credit eligibility. Only when the buyer acts as the legal importer can they claim import tax credits. If this is not properly defined in the contract, it creates not only tax disadvantages — but also undermines traceability and documentation for compliance or CBAM requirements.‍

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Additionally, unclearly defined responsibilities can result in additional costs from delays, retroactive clearance fees, or increased warehousing costs. A strategic approach to Incoterms helps prevent these issues.‍‍

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‍What Companies Should Focus on Now

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For a future-proof procurement organization, Incoterms should not just be treated as a contract appendix — they should be actively integrated into the procurement strategy:‍

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• Create clarity: Choose Incoterms deliberately, document them, and communicate them consistently both internally and externally

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• Understand customs processes: Who handles which obligations? Are there internal capabilities, or do external partners need to be involved?

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• Leverage supplier negotiations: Negotiate Incoterms strategically — and align them with pricing, risk allocation, and logistical requirements

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• Use digital tools: Solutions like Tacto enable structured capture of Incoterms at the item level — and help identify risks and cost drivers early

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Conclusion

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‍Incoterms are far more than standard boilerplate — they are a strategic tool for procurement. Those who understand and apply them correctly reduce risks, optimize processes, and secure tax and logistical advantages. Especially in an international context where political uncertainties are increasing and tariff regimes can change rapidly, the correct application of Incoterms becomes a decisive success factor.

Whether it's transport, costs, or risk — choosing the right Incoterms significantly impacts how efficiently and securely your procurement processes run. In our compact overview, learn who takes on responsibility and when, and how the correct application of Incoterms helps you avoid cost traps and uncertainty. Understand, compare, and leverage them strategically in procurement!