As a global exporter of high precision metal tubing products, Fine Tubes recognizes Incoterms® as the international framework of rules for shipping. Published by the International Chamber of Commerce, Incoterms® is an official set of rules for the interpretation of national and international commercial terms, providing the most important foundations for regulating international trade. On 1 January 2011 the seventh revision – Incoterms® 2010 – came into effect and we do business within these guidelines.
Incoterms® (International Commercial Terms) were first published in 1936 by the International Chamber of Commerce (ICC) in Paris. Since then, companies have primarily relied on Incoterms® to help fix the terms of delivery in international transactions. As modes of transportation used in international trade have changed, Incoterms has been regularly adapted to bring it into line with new carriers, shipping methods and the use of new technologies such as electronic information exchange.
The new Incoterms that came into effect extended the rules to cover domestic trade flows. With the introduction of new terms, this version adds new definitions and greater precision to the previous rules.
Traditionally, Incoterms rules were designed for international trade flows in which goods crossed borders. Since free trade zones have drastically reduced the impact of border formalities, Incoterms 2010 can now be expressly applied to domestic trade flows as well.
The number of Incoterm has been cut from 13 to 11, with seven terms covering multi-mode transport and four terms for sea and inland water transport. The terms DAF, DES, DEQ and DDU have been replaced with the new terms DAT (Delivery at Terminal) and DAP (Delivery at Place). The rules for the transfer of risk have been adapted in the terms FOB, CFR and CIF.
DAT (Delivered at Terminal)
The new term DAT means the seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer. In road freight transportation it typically describes the origin and destination terminals involved. If the named terminal under DAT is the same as the origin terminal, seller bears the cost of pick-up by cartage and terminal handling.
DAP (Delivered at Place)
The new term DAP means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport, ready for unloading at the named destination. It replaces the former terms DAF (Delivered At Frontier), DES (Delivered Ex Ship) and DDU (Delivered Duty Unpaid). Just like under the DDU Incoterm, the most frequently used term in road freight transportation, the delivery place of the consignment must be named.
Changes To Existing Terms
The new rules for the transfer of risk mainly cover sea freight transportation, particularly with the terms FOB, CFR and CIF. Whereas in the past the goods had to cross the ship’s rail before the risk was transferred to the other party, the goods must now be physically loaded on the ship before the risk is transferred. The new Incoterms recommend that multi-modal terms be used in principle for containerized traffic since a precise definition of the terms pertaining to the transfer of risk (CFR and CIF) is no longer possible due to the conditions in modern container ports.