Transplace highlights changes to Incoterms and its effect on international shippers

Short for international commercial terms, these internationally recognized rules are used in international and domestic contracts as a way to bring legal certainty to business transactions and avoid miscommunication by clearly identifying the responsibilities of the buyer and seller and ensuring traders in different countries are using a standard language

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The International Chamber of Commerce (ICC) has announced the new Incoterms 2010 rules, set to come into effect on January 1, 2011, replacing the current Incoterms 2000.

Short for international commercial terms, these internationally recognized rules are used in international and domestic contracts as a way to bring legal certainty to business transactions and avoid miscommunication by clearly identifying the responsibilities of the buyer and seller and ensuring traders in different countries are using a standard language.

The new Incoterm rules have been updated in order to address the recent trends in global trade and current practices, such as the increased use of electronic documents, developments in security and more.

Spokesmen for Transplace International said that the company has outlined the new Incoterm rules and how companies can prepare for these changes.

“The Incoterms 2010 rules take into account the latest developments in commercial practice as well as updates, and it also consolidates some of the previous rules,” stated spokesmen. “These rules are split into two classes to help international traders select the most suitable rule in relation to the mode of transport – one class is used for any mode of transport and the other is solely for maritime transport.”

Additionally, said spokesmen, the current 13 Incoterms will be reduced to 11 including:

• Rule for any mode of transport: Carriage and Insurance Paid To (CIP); Carriage Paid To
(CPT); Delivery At Place (DAP); Delivery Duty Paid (DDP); Delivery At Terminal (DAT); Ex
Works (EXW) and Free Carrier (FCA)

• Rules for maritime transport: Free Alongside Ship (FAS); Free On Board (FOB); Cost and
Freight (CFR) and Cost, Insurance, Freight (CIF)

Transplace spokesmen added that significant changes have been made to the terms, which are used when the goods are to be delivered to the buyer at the specified point in the buyer’s country, where the risk is then passed to another party.

Within this group, there are two new terms added – DAT and DAP – and four have been
deleted - DAF, DES, DEQ and DDU. DAP should now be used wherever DAF, DES and DDU were previously used, indicating that delivery takes place once the seller has left the good unloaded for the buyer at the named location. DAT should now be used wherever DEQ was previously used, indicating that delivery takes place once the goods have been unloaded at the specified terminal.

“In contrast to the previous Group rules, both DAP and DAT can now be used for any mode of
Transport—not just for maritime transport. Attempts have also been made to make the rules more accessible for domestic users and applicable for the present day processes by advising on the use of the rules in the domestic trade,” said spokesmen.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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