International Commercial Terms, known as
“Incoterms”, are internationally accepted rules used
in commerce that deal with the costs, risks and responsibilities of both buyers
and sellers when shipping goods internationally. On January 1, 2011 the International
Chamber of Commerce (ICC) will release its newly revised Incoterms® 2010.
It is crucial to understand the new
Incoterms in order to accurately negotiate or quote your sales contracts. The 2010 revision reflects the advances in international
trade over the last decade and will take into account issues such as
developments in cargo security post 9/11, the new Institute Cargo Insurance
Clauses and will provide greater detail aspects of Delivery, which are
critical for revenue recognition compliance.
Although Incoterms 2010 will not be
officially released until September, the ICC recently published the new
listings of terms, which hints at some of the significant changes ahead in the
new publication. There will be fewer terms with the elimination of: DAF
(Delivered at Frontier), DES (Delivered Ex Ship), DEQ (Delivered Ex Quay) and DDU
(Delivered Duty Unpaid); and, two new rules will be introduced: DAT (Delivered
at Terminal) and DAP (Delivered at Place). The new rules will be divided into
two sections. One set of rules governs any mode of transportation and the
second set includes rules for sea and inland waterway transport.
The following are the new Incoterms 2010
rules:
Rules for any Mode or Modes of Tranports:
EXW - Ex Works
FCA - Free Carrier
CPT - Carriage Paid To
CIP - Carriage and Insurance Paid
DAT- Delivered at Terminal
DAP - Delivered at Place
DDP - Delivered Duty Paid
Rules for Sea and Inland Waterway
Transport:
FAS – Free Alongside Ship
FOB – Free On Board
CFR – Cost and Freight
CIF – Cost, Insurance and Freight
The U.S. Council for
International Business will be offering an all-day seminar on the ICC Incoterms
2010 throughout the fall, featuring Frank Reynolds, the U.S. Delegate to the
ICC Incoterms 2010 Revision Committee. To view the schedule for a location nearest
you and to register online, please visit: http://www.iccincoterms2010.org/. Please contact your SVB
international trade advisor for information about how
to obtain a copy of the new rules.