Incoterms
The difference between Incoterms 2000 and Incoterms 2010
International Commerce Terms (Incoterms), introduced by the International Chamber of Commerce (ICC) in 1936 primarily for individuals participating in global trade, serves as a guideline for the acquisition and transportation of goods internationality (Varoujian, 2011). Incoterms is beneficial to businesses because it helps regulate the risks, costs and other obligations. While it is recommended that businesses who engage in trade implement Incoterms, it is not mandatory and should be agreed upon by both parties (Varoujian, 2011). Due to the increase in global sales and international trade, the Incoterm are updated every ten years to account for the growth and development in the trade market (Shepherd & Graham). The Incoterm 2010 came into effect on January 1, 2011 and includes changes in terminology, commodity sales, and handling charges. Also included in the update are guidance notes that explain the basic of each Incoterm rule, when it should be used, when risk passes and so on (Shepherd & Graham). Both the seller and buyer are obligated to follow these rules (once contracted). The updates are flexible and buyers/sellers can resort to using the old guidelines as long as they specify which version they are using in their contracts (Shepherd & Graham).
Some terminology was changed in the update that are important for the traders to be aware of and have been presented in a more user-friendly way including visual diagrams. For example, the terms “DAF” (delivered at frontier), “DAT” (delivered at terminal), and the term “DES” (delivered ex ship) are now replaced by “DAT” (delivered at terminal) and “DAP” (delivered at place) (Varoujian, 2011). This change was developed to clearly differentiate between delivering areas. “CIP” (Carriage and Insurance Paid to) the buyer must make available to the seller any information regarding insurance information. “CPT” (Carriage Paid To) with this operation the shipper
International Commerce Terms (Incoterms), introduced by the International Chamber of Commerce (ICC) in 1936 primarily for individuals participating in global trade, serves as a guideline for the acquisition and transportation of goods internationality (Varoujian, 2011). Incoterms is beneficial to businesses because it helps regulate the risks, costs and other obligations. While it is recommended that businesses who engage in trade implement Incoterms, it is not mandatory and should be agreed upon by both parties (Varoujian, 2011). Due to the increase in global sales and international trade, the Incoterm are updated every ten years to account for the growth and development in the trade market (Shepherd & Graham). The Incoterm 2010 came into effect on January 1, 2011 and includes changes in terminology, commodity sales, and handling charges. Also included in the update are guidance notes that explain the basic of each Incoterm rule, when it should be used, when risk passes and so on (Shepherd & Graham). Both the seller and buyer are obligated to follow these rules (once contracted). The updates are flexible and buyers/sellers can resort to using the old guidelines as long as they specify which version they are using in their contracts (Shepherd & Graham).
Some terminology was changed in the update that are important for the traders to be aware of and have been presented in a more user-friendly way including visual diagrams. For example, the terms “DAF” (delivered at frontier), “DAT” (delivered at terminal), and the term “DES” (delivered ex ship) are now replaced by “DAT” (delivered at terminal) and “DAP” (delivered at place) (Varoujian, 2011). This change was developed to clearly differentiate between delivering areas. “CIP” (Carriage and Insurance Paid to) the buyer must make available to the seller any information regarding insurance information. “CPT” (Carriage Paid To) with this operation the shipper