What do the changes to the freight delivery terms Incoterms mean?

AIncoterms (international commercial terms) are a series of internationally recognised standardised terms that govern the costs, risks and practical arrangements for the sale of goods. They are relevant for anyone involved in the buying and selling of goods and services, especially international sourcing.

Reviewed every decade, the latest version came out on January 1 this year. Wragge & Co commercial partner David Lowe was one of eight experts in the international ICC working group that led the review and redrafting of the terms.

Four Incoterms rules have been abolished, two introduced and one is unchanged. “The new rules allow for Incoterms to be used regardless of the mode of transport, which should make them more useful for container traffic,” says Lowe. He says there has also been a move away from terms referring to ‘duty’, which should encourage their use in the US or free-trade areas.

The biggest problem to date, says Lowe, has been the incorrect use of Incoterms - the revisions are intended to be user friendly and to mirror the modern language of international trade. “Too often, parties to domestic sales contracts use Incoterms designed for maritime transport, where in reality the goods will never see the sea. The Incoterms 2010 allow the parties to use Incoterms for any mode of transport and are designed to encourage better use,” says Lowe.

For more information visit iccwbo.org/Incoterms.