Incoterms 2010 Update

The International Chamber of Commerce (ICC) has completed the eighth revision of the International Commercial Terms (Incoterms). The new version called Incoterms 2010 will start to apply from 01 January 2011. Global AFR and OFR product is currently working on an e-learning course that will go further into details of the different terms. In the meantime here is an extract of the primary changes to the Incoterms. So what are the changes to Incoterms 2010 Removed terms: DAF, DES, DEQ and DDU New Incoterms: DAT and DAP DAT (Delivered at Terminal named place destination) This means the seller delivers (or meets their obligation) when the goods is unloaded from the arriving means of transportation and are placed at the disposal of the buyer at a named terminal at the named port or place of the destination. Terminal includes any place, such as quay, warehouse, container yard or road, rail or air cargo terminal. The seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination. If the seller should bear the risks and costs involved in transporting and handling the goods from the terminal to another place, then DAP or DDP should be used DAT requires the seller to clear the goods for export, but has no obligation to clear the goods for import or pay any duty or carry out import customs formalities DAP (Delivered at Place named place destination) The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport, ready for unloading at the named place of destination. The seller bears all risks involved with bringing the goods to the named place. If the seller incurs costs for unloading under its contract of carriage, it cannot recover that from the buyer unless otherwise agreed upon between the parties. DAP requires the seller to clear the goods for export but has no obligation to clear goods for imports, or pay duty or carry out import customs formalities.

Changes of rules to existing terms: FOB and FAS No major changes to the general definition and rules. Ships Rail terminology is no longer mentioned for FOB the reference is now loaded on board the vessel. The transfer of Risk now follows the transfer of Cost. FOB is no longer recommended for containerized shipments because these are meant for cargo that are truly delivered by the seller (or appointed agent/trucker) to the actual vessel side. Containers are now considered delivered once they are gated-in the port and then are staged into a slot for loading later and therefore Incoterms do not really apply.

CPT and CIP If the cost of unloading is part of the freight arrangement the buyer should not pay for this. The seller should inform the buyer on what is included in the sellers freight agreement with the transporting company.

CFR and CIF If the cost of unloading is part of the freight arrangement the buyer should not pay for this. The seller should inform the buyer on what is included in the sellers freight agreement with the transporting company.

Comparison list (Incoterms 2000 versus 2010) Incoterms 2000 EXW Ex Works FCA Free Carrier FAS Free Alongside Ship FOB Free On Board CFR Cost and Freight CIF Cost Insurance and Freight CPT Carriage Paid To CIP Carriage and Insurance Paid to DAF Delivered At Frontier DES Delivered Ex Ship DEQ Delivered Ex Quay DDU Delivered Duty Unpaid DDP Delivered Duty Paid Incoterms 2010 EXW Ex Works FCA Free Carrier FAS Free Alongside Ship FOB Free On Board CFR Cost and Freight CIF Cost Insurance and Freight CPT Carriage Paid To CIP Carriage and Insurance Paid to DAT Delivered At Terminal DAP Delivered At Place DDP Delivered Duty Paid