INCOTERMS 2010

American Institute for International Steel Webinar January 14, 2011 Presenters: Mary Jo Muoio, OHL Diane Raffle, OHL Moderator: Steven W. Baker, Esq.

What INCOTERMS are not:

Terms of Sale or Passage of Title
Legally required Universal or exclusive

What INCOTERMS are:

Privately developed by the ICC
Internationally understood

Different than UCC or other terminologies

Shipping terms

INCOTERMS Should be Identified

Cite specifically
By version Clearly spell out any modifications or variations

Incoterms 2010
What to Know About Which To Use

Incoterms 2010
Series of internationally-recognized, standardized trade terms published by the International Chamber of Commerce
INternational COmmercial TERMS

Used for international and domestic transactions Accepted by governments, legal authorities, and business

On sale now!
Published in book format available from the ICC at: www.iccbooks.com
Incoterms 2010 By the International Chamber of Commerce (ICC) ICC Publication No.715 2010 Edition

Also available as an attractive wall hanging. Suitable for framing!

Incoterms 2010 Wallchart International Chamber of Commerce (ICC) ICC Publication No. 716 , 2010 Edition

Practical Impact of Change

New terms were effective January 1, 2011 Old terms may apply to previously issued contracts Make any necessary changes to standard contract language and forms Inform colleagues

ChangesThe Basics
Two Categories of Terms
Rules for any mode(s) of transportation Rules for sea and inland waterway

Removal of 4 terms
DAF, DES, DEQ, and DDU

Inclusion of 2 new terms

DAP and DAT

ChangesThe Basics
Documentation requirements can be met with equivalent electronic records Provides for security-related requirements Specifically addresses responsibility for terminal handling charges Allows for sellers in-transit sales to procure goods shipped

ChangesThe Terms
Simplification
Four categories reduced to two 13 terms consolidated to 11

Incoterms 2000 That was Then

EXW FCA FAS FOB CRF CIF CPT CIP DAF DES DEQ DDU DDP Ex Works Free Carrier Free Alongside Ship Free On Board Cost And Freight Cost, Insurance and Freight Carriage Paid To Carriage and Insurance Paid To Delivered at Frontier Delivered EX Ship Delivered EX Quay Delivered Duty Unpaid Delivered Duty Paid

Removed four and added two

REMOVED

DAF DES DEQ DDU

Delivered Delivered Delivered Delivered

ADDED

at Frontier EX Ship EX Quay Duty Unpaid

DAT DAP

Delivered at Terminal Delivered at Place

Incoterms 2010 This is Now

EXW FCA FAS FOB CFR CIF CPT CIP DAT DAP DDP Ex Works Free Carrier Free Alongside Ship Free On Board Cost and Freight Cost, Insurance and Freight Carriage Paid To Carriage and Insurance Paid To Delivered at Terminal Delivered at Place Delivered Duty Paid

Incoterms USED FOR ALL MODES OF TRANSPORTATION

EX FCA CPT CIP DAT DAP DDP Ex Works Free Carrier Carriage Paid To Carriage and Insurance Paid To Delivered at Terminal Delivered at Place Delivered Duty Paid

Incoterms 2010 USED ONLY FOR MARINE

FAS FOB CFR CIF Free Alongside Ship Free On Board Cost and Freight Cost, Insurance and Freight

EX WORKS (EXW) (named place)

Named place is where the shipment originates usually the sellers premises Seller must have goods available and packaged when promised Buyer must arrange pre-carriage, export clearance, main carriage, import clearance and on carriage Neither party is required to insure Transport Mode: All

Free Carrier (FCA) (named place)

Named place is either the place where the shipment originates such as the sellers premises or another place agreed within the sellers country Seller is to have goods available and packaged when promised, load collecting vehicle, pre-carriage and export clearance Buyer must unload delivering vehicle, main carriage, import clearance and on carriage Neither party is required to insure Transport mode: All modes

Free Alongside Ship (FAS) (named port)

Named port is alongside a vessel at port on the sellers side Seller is to deliver goods, export packed alongside the buyer-designated vessel at the port on the sellers side along with export clearance Buyer loads vessel, arranges main carriage, import clearance and on carriage Neither party is required to insure Transport Mode: Vessel Only

Free on Board (FOB) (named port)

Named port is loaded on a vessel at a port on the sellers side Seller delivers the goods on board the buyer-designated vessel at the port on the sellers side along with export clearance Buyer arranges main carriage, import clearance and on carriage Neither party is required to insure Transport mode: Vessel Only

Cost & Freight (CFR) (named port)

Named port is on the buyers side Seller delivers goods export packed on board the sellers designated vessel at the port on the sellers side, pays transportation costs to the agreed port on buyers side, and arranges export clearance Buyer arranges vessel unloading, import clearance and on carriage Neither party is required to insure Transport Mode: Vessel Only

Carriage Paid To (CPT) (named place)

Named place on buyers side Seller delivers goods export packed to the carrier for transportation to the named place of destination and will pay all transportation costs thereto along with arranging export clearance Buyer arranges import clearance and on carriage Neither party is required to insure Transport mode: All modes

Cost, Insurance and Freight (CIF) (named port)

Named port is on buyers side Seller delivers goods export packed on board the sellers-designated vessel at port on sellers side, pays all transportation costs to agreed port on the buyers side and arranges export clearance Buyer arranges import clearance and on carriage Seller must provide at least minimum coverage Transport Mode: Vessel Only

Cost, Insurance Paid (CIP) (named place)

Named place on buyers side Seller delivers goods export packed to the carrier for transportation to the named place of destination and pays all transport costs thereto along with arranging export clearance Buyer arranges import clearance and on carriage Seller must provide at least minimum insurance coverage Transport Mode: All Modes

Delivered at Terminal (DAT) (named place)

Named place at terminal on buyers side (a terminal at the destination port or a terminal not far beyond the destination port where its yet to be cleared by Customs) Seller arranges export clearance and delivers goods export packed to the named destination terminal, pays all transport costs thereto and unloads Buyer arranges import clearance and on carriage Neither party is required to insure Transport Mode: All Modes

Delivered at Place (DAP) (named place)

Named place on buyers side Seller arranges export clearance, delivers export packed goods to the named place of destination and pays all transportation costs thereto Buyer arranges import clearance and on carriage Neither party is required to insure Transport mode: All Modes

Delivered Duty Paid (DDP) (named place)

Named place is on buyers side Seller arranges export clearance, delivers export packed goods cleared for import at the named destination and pays all transportation costs thereto Buyer possibly responsible for unloading, on carriage Neither party is required to insure Transport Mode: All Modes

For more information contact:

Mary Jo Muoio Senior Vice President, Trade Services mjmuoio@ohl.com 973 402 8300 Diane Raffle Drawback and Export Compliance Manager draffle@ohl.com 267 570 2850