Incoterms 2010

Last 1st January 2011, the new Incoterms 2010 published by the International Chamber of Commerce (ICC) will go into effect, reflecting developments in international trade within the last decade such as the increased use of electronic documentation and heightened global concerns about cargo security.

After eight months a lot of people is still using the previous one Incoterms 2000. I would like to encorage everybody to use the new Incoterms 2010 in thet contracts, invoices,  etc.

Main changes are:

- Incoterms DAF, DES, DDU and DEQ replaced

Because of increased point-to-point sales and containerisation, Incoterms 2010 rename  four existing Incoterms with two new Incoterms:

New Incoterm 2010	Incoterm 2000
Delivered at Place (DAP)	Delivered at Frontier (DAF)Delivered Ex Ship (DES)Delivered Duty Unpaid (DDU)
Delivered at Terminal (DAT)	Delivered Ex Quay (DEQ)

- Institute cargo clauses updated and insurance obligations clarified 

In 2009, insurance markets adopted the revised Institute Cargo Clauses (LMA/IUA) (2009). Incoterms Cost Insurance and Freight (CIF) and Carriage and Insurance Paid (CIP) have been amended to reflect this. The amendments also clarify information obligations regarding insurance.

- Obligations around terminal handling charges clarified 

Incoterms 2010 seeks to reduce the potential for buyers to be charged twice for terminal handling charges. Pass through of the cost of carriage of goods to an agreed destination, which often resulted in buyers being charged twice, should disappear as a result of amendments to CIP, CPT, CFR, CIF, DAT, DAP and CCP Incoterms.

- Requirements and obligations associated with string sales recognised 

Incoterms 2010 recognises and clarifies the practice of string sales (ie, multiple sales of goods during transit).

Specifically, FCA, CPT, CIP, FAS, FOB, CFR and CIF Incoterms have been amended to provide that the seller in the middle of a string sale has an obligation to “procure goods shipped” and not to “ship” the goods.

The seller’s obligation to contract for the carriage of goods has been amended to allow the seller to procure a contract of carriage.

Previously, confusion occurred when some people misused FOB to indicate any point of delivery. This new categorisation clearly states that the FOB rule is meant to be used solely for sea and inland waterway transport.

Two changes for the FOB incoterm: the seller’s reponsibility extends until the goods are “on board the vessel” rather than “past the ship rail” (a small technical difference).

-Electronic Records

 While earlier versions of Incoterms allowed for the use of electronic data interchange (EDI) messages if the parties had agreed on their use, Incoterms 2010 provides that paper documentation may be replaced with equivalent electronic records if agreed between the parties or customary. This gives electronic means of communication the same validity as paper documentation

Incoterms 2010

Multimodal                                               Sea shipment

Ex Works (EXW)	Free Alongside Ship (FAS)
Free Carrier (FCA)	Free on Board (FOB)
Carriage Paid To (CPT)	Cost and Freight (CFR)
Carriage and Insurance Paid to (CIP)	Cost, Insurance and Freight (CIF)
Delivered at Terminal (DAT)
Delivered at Place (DAP)
Delivered Duty Paid (DDP)