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Incoterms to take effect January 2011
In September 2010, Incoterms 2000 was updated and released as Incoterms 2010 with an effective date of January 1, 2011. The Incoterms are revised approximately every ten years although there is no requirement to do so. Incoterm rules are an international standard reflecting business-to-business practices in contracts for the sale of goods. Companies that buy or sell internationally need to be familiar with the updated changes.
Incoterms, published by the International Chamber of Commerce (ICC), strive to reflect current trends and are intended to commercially match what physically happens to the goods. For instance, in this update, Incoterms addresses the issues of security related clearances, electronic documentation and “string sales” of cargo. The term, “string sales” refers to cargo that is sold several times during the transportation. These are some examples of how Incoterms revisions have adapted to trends that have been developing over the past ten years.
Finally, there is some reorganization in the book. First there are Guidance Notes at the beginning of each term instead of in the introduction; and second, the terms are displayed separating those Incoterm Rules available for all modes of transport, from those terms that are only used for sea and inland waterways.
The 2010 rewrite reduces the 2000 version from 13 terms to 11. There are 2 new items: Delivered At Terminal (DAT) and Delivered at Place (DAP) which replace the the terms Delivered At Frontier (DAF); Delivered Ex Ship (DES) and Delivered Ex Quay (DEQ) and Delivered Duty Unpaid (DDU) which commercially had minimal application.
The Incoterm 2010 Rules that apply to any Mode of Transport
- EXW - Ex Works
- FCA - Free Carrier
- CPT - Carriage Paid To
- CIP - Carriage and Insurance Paid To
- DAT - Delivered at Terminal (New Term)
- DAP - Delivered at Place (New Term)
- DDP - Delivered Duty Paid
The Incoterm 2010 Rules that apply to Sea and Inland Waterway Transport
- FAS - Free Alongside Ship
- FOB - Free On Board
- CFR - Cost and Freight
- CIF - Cost Insurance and Freight
The debut of the DAP term accommodates both domestic and international transactions and replaces the more limited terms DAF, DES and DDU. The multimodal term DAT replaces the term DEQ which was only available for ocean freight.
Remember Incoterms are not law but international commercial rules that divide costs, risk and responsibilities between sellers and buyers. They do not address the passage of title. Incoterms are also only recognized if they are incorporated in the sales or purchase agreement between the seller and the buyer. Companies are also reminded that if they intend to adopt Incoterms 2010 they must remember to specify the 2010 revision in their contracts or agreements that applies to avoid any confusion.
Copies of Incoterms 2010 can be ordered through the ICC and are available online at www.iccwbo.org
For more information please contact your local DSV representatives.
Incoterm changes 2000 vs. 2010
Incoterms 2010 Helpful Guidelines