Incoterms 2010 now in effect

Incoterms 2010.pngSeveral blog readers have suggested it should highlight the arrival of Incoterms 2010, which took effect from 1 January this year.

As always, since first publication in 1936, they have been produced by the International Chamber of Commerce (ICC). They are important, because they define the terms of delivery for chemicals, and all other traded products.

This is the first revision for 10 years, and so far seems to have attracted little public comment. Of course, the ICC is a ‘neutral’ body, and so its terms do not advantage either buyers or sellers. Equally, their use is not mandatory, and people can still continue to use Incoterms 2000 if they prefer.

But there is certainly a concern in some companies that this lack of discussion may lead to them being specified them in new contracts, without everyone fully understanding their implications. As one expert told the blog, “the trick is to make sure you read them, and really understand them“.

Another senior purchasing manager with a global major emphasised that “there are a host of small, subtle, but significant changes“. For example, DDU (Delivered Duty Unpaid) has been abolished. Equally, CIF (Carriage, Insurance and Freight) can only be used for maritime shipments.

The concern is that the use of Incoterms 2010 may lead to confusion, if one side to a transaction doesn’t realise changes have been made. In turn, this could cause delays to a shipment, and to increased costs.

Incoterms are not a glamorous subject. But the blog would certainly recommend anyone involved with product movements to make sure they really understand where their liability starts under Incoterms 2010 and, more importantly, where it ends.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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One Response to Incoterms 2010 now in effect

  1. Ilan 15 January, 2011 at 11:05 am #

    Another notable disappearance is the DES term – this is another popular one in the marine business.

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