INCOTERMS® 2010 of the International Chamber of Commerce
INternational COmmercial TERMS : Trade terms developed in 1936 by the International Chamber of Commerce (ICC) and regularly reviewed. Last version dated from 2000. New Incoterms® 2010 rules came into force on 1st January 2011.
ICC looks at revising Incoterms Rules for 2020.
Incoterms® are one of the essential elements of a properly drafted contract of sale of tangible goods. They are not mandatory in the contracts, but are strongly recommended and very useful. Incoterms® enable the exporters to quote prices that clearly allocate the costs and risks of transport between seller and buyer.
Incoterms® deal with :
- Costs allocation between seller and buyer related to transport, insurance and customs (if any).
- Risks responsibilities of loss of, or damage to the goods.
- Documents : namely transport and customs documents.
Incoterms® are widely recognized by common abbreviations of 3 letters such as FOB or CIP.
The rules can be classified in 2 groups :
- 7 Incoterms® for all modes of transport : air, road, rail, multimodal and of course for sea transport, when goods are handed over to the carrier before they are on board the vessel. For example containers which are delivered at a terminal.
- 4 Incoterms® for sea and inland waterway transport : when point of delivery and place of destination are both ports (bulk, loose and general cargo for example).
The main features of Incoterms® 2010 :
- DEQ (delivered ex quay) replaced by DAT (delivered at terminal).
- DAF (delivered at frontier), DES (delivered ex ship) and DDU (delivered duties unpaid) replaced by DAP (delivered at place).
Incoterms® 2010 take into account :
- The new security program : the one who pays customs clearance must pay the new security-related document.
- The evolution of new electronic procedure.
- The new insurance cover clauses : 2009 Revised Institute Cargo Clauses.
Some confirmations and innovations :
- Maritime rules : ship’s rail as point of delivery has been given up.
- EXW represents the seller’s minimum obligation in « domestic trade » where no customs formalities are required.
- FCA « seller’s premises » : should be the seller’s minimum obligation in international trade.
- Incoterms® 2010 seek to avoid paying twice for THC (terminal handling charges) by clearly allocating such costs between seller and buyer.
Incoterms® beginning with E – F – C : the seller fulfills its delivery obligation at the point of shipment. After that point, the buyer must bear all risks of loss of, or damage to the goods up to the named place.
Incoterms® beginning with D : the seller must bear all risks (and costs) in bringing the goods to the named place in the country of destination.
INCOTERMS® 2010 FOR ALL MODES OF TRANSPORT : TABLE OF COSTS AND RISKS ALLOCATION.
INCOTERMS® 2010 FOR SEA AND WATERWAY TRANSPORT : TABLE OF COSTS AND RISKS ALLOCATION.