Litco News
INCOTERMS®: Staying on Top of Exporting Terminology
The International Chamber of Commerce (ICC) annually publishes a revised version to its International Commercial Terms, also known as INCOTERMS®, that take effect on January 1 of a given year. INCOTERMS are a set of three-letter standard trade terms most commonly used in international contracts for the sale of goods. First published in 1936, INCOTERMS provide internationally accepted definitions and rules of interpretation for most common commercial terms. In the US, INCOTERMS are increasingly used in domestic sales contracts rather than UCC shipment and delivery terms. Perhaps the most frequently cited – FOB – FREE ON BOARD (… named port of shipment) defines that: The Seller delivers the goods on board the ship and clears the goods for export. From that point, the Buyer bears all costs and risks of loss or damage.
In recent years, rules revisions have contained changes, such as a reduction in the number of terms and creating two new terms. Incoterms 2010 added Delivered at Terminal (DAT) and Delivered at Place (DAP).INCOTERMS 2010 also attempt to better take into account the roles cargo security and electronic data interchange now play in international trade.
WHAT INCOTERMS DO
INCOTERMS inform the sales contract by defining the respective obligations, costs and risks involved in the delivery of goods from the Seller to the Buyer.
WHAT INCOTERMS DO NOT DO
INCOTERMS by themselves DO NOT:
• Constitute a contract;
• Supersede any laws governing the contract;
• Define where title transfers
• Address the price payable, currency or credit terms of a sale
These items are defined by the express terms in the sales contract and by the governing law. Be Aware: If you use INCOTERMS in the Sales Contract or Purchase Order, you should identify the appropriate INCOTERM Rule [e.g. FCA, CPT, etc.], stating “INCOTERMS 2011″ and specify the place or port as precisely as possible.
For answers to Frequently asked questions about INCOTERMS or to register for training, visit the International Chamber of Commerce website.
Of course part of exporting palletized goods requires that you use ISMP 15 approved pallets – so be sure to plan ahead and contact your Litco service rep.