In September 2010, the International Chamber of Commerce (ICC) launched the new Incoterms® 2010 rules, set to come into force on 1 January 2011.

They will replace the previous Incoterms® 2000 rules, and have made definite changes. The aim is to update the process for the 21st century by addressing the recent trends in global trade and current practices (for example, the increased use of electronic documents, and developments in security).

Two classes

The rules have been split into two classes to help traders choose the most suitable rule in relation to the mode of transport. One class can be used for any mode of transport, and the other is reserved solely for maritime transport. The current 13 Incoterms® will be reduced to 11, following significant changes made to the ‘D’ group (see below).

• Rule for any mode of transport: Ex Works (EXW); Free Carrier (FCA); Carriage Paid To (CPT); Carriage and Insurance Paid To (CIP); Delivery At Terminal (DAT); Delivery At Place (DAP) and Delivery Duty Paid (DDP)
• Rules for maritime transport: Free Alongside Ship (FAS); Free On Board (FOB); Cost and Freight (CFR) and Cost, Insurance, Freight (CIF)

The ‘D’ Group
The ‘D’ Group of terms are used when the goods are to be delivered to the buyer at the point required in the buyer’s country, at which point the risk passes as well.

Delivered at Frontier (DAF), Delivered Ex Ship (DES), Delivered Ex Quay (DEQ) and Delivered Duty Unpaid (DDU) have been eliminated. They will be replaced by Delivery at Place (DAP) and Delivery at Terminal (DAT). Delivered Duty Paid (DDP) will remain unchanged.

DAP should now be used wherever DAF, DES and DDU were previously used. Delivery takes place once the seller has left the good unloaded for the buyer at the named place.

DAT should now be used wherever DEQ was previously used. Delivery takes place once the goods have been unloaded at the named terminal.

In contrast to the previous ‘D’ Group rules, both DAP and DAT can be used for any mode of transport (not just for maritime transport), and it is intended that the changes will aid their use for container traffic.

Further updates

Insurance

For those Incoterms® where a party is obliged to take out insurance (for example, CIF and CIP), the rules have been updated to account for the changes brought about by the Institute Cargo clauses (updated on 1 January 2009).

Security

The high level of security that has previously been introduced will remain the same. This means that both the buyer and the seller will continue to be subject to increased obligations to provide information when obtaining import and export clearance. For this reason, the rules have set out obligations on both the buyer and the seller to provide any information requested by the other party.

Terminal handling costs

The rules state clearly under each rule which party is to be responsible for the terminal handling costs. This is to avoid any possible confusion at the port or terminal.

Source: shoosmiths.co.uk