Brief Introduction of Incoterms 2010

The International Chamber of Commerce (ICC) announced that Incoterms® 2010 launched in September 2010, come into effect on 1 January, 2011.

To keep up with the rapid expansion of world trade and globalization, the Incoterms rules are revised about once a decade. Since the last revision in 2000, much has changed in global trade and the current revision will take into account issues such as developments in cargo security and the need to replace paper documents with electronic ones.

Get familiar with the New Incoterms® 2010. You may need to renegotiate any of your contracts that may be affected by the changes.

The 2010 edition includes 11 terms instead of the 13 in the previous edition.

DELETION
The following terms from Incoterms 2000 have been deleted from the list: DAF, DES, DEQ and DDU.

NEW ADDITION
Two new terms have been added to the list: DAT and DAP. DAT replaces Incoterms 2000 rule DEQ. DAP replaces Incoterms 2000 rules DAF, DES and DDU.

Whilst Incoterms 2000 had four categories, Incoterms® 2010 only has two categories. The Incoterms® 2010 are arranged in two categories as follows:

RULES FOR ANY MODE OF TRANSPORT
CIP – Carriage and Insurance Paid
CPT – Carriage Paid To
DAP – Delivered At Place
DAT – Delivered At Terminal
DDP – Delivered Duty Paid
EXW – Ex Works
FCA – Free Carrier

RULES FOR SEA AND INLAND WATERWAY TRANSPORT ONLY
CFR – Cost and Freight
CIF – Cost, Insurance and Freight
FAS – Free Alongside Ship
FOB – Free On Board

In addition to the 11 rules, Incoterms® 2010 includes:
• Extensive guidance notes and illustrative graphics to help users efficiently choose the right rule for each transaction;
• New classifications to help choosing the most suitable rule in relation to the mode of transport;
• Advice for the use of electronic procedures;
• Information on security-related clearances for shipments;
• Advice for the use of Incoterms® 2010 in domestic trade.

Used in international and domestic contracts for the sale of goods, Incoterms help parties avoid misunderstandings by clearly identifying the obligations of the buyer and seller.