Incoterms Update: Revision No. 8

Incoterms Update: Revision No. 8

The eighth revision of the Incoterms, the International Chamber of Commerce shipment and delivery terms, is well under way.

After several alternative titles were considered, the new version was officially named Incoterms 2010 as it is scheduled for release late this year. Unlike previous versions, plans are that Incoterms 2010 will come into force on Jan. 1, 2011.

Since Incoterms are not law, and follow trade practice rather than attempting to establish it, the ICC can revise them whenever it determines change is required. This was decided in November 2007, and the revision process began shortly thereafter. It has accelerated to address a huge number of suggestions from the 130-plus ICC affiliates worldwide.

The next meetings are scheduled for London this month, Prague in March, and Paris in early May, when a final draft is scheduled to be submitted for approval.

Neither the release date nor the anticipated effective date is set in stone at this time.

Incoterms are a product of the ICC’s Commercial Law and Transport Commission, which is responsible for drafting successive proposals until consensus is achieved. Other ICC commissions such as Transportation, Banking, and Customs were also invited to comment. Each comment is individually reviewed on its own merit, as well as its relation to other comments and to Incoterms 2000.

This process is time-consuming, with plenty of back-and-forth communication in the form of successive draft proposals.

Although considerable drafting work remains, the following predictions about Incoterms 2010 are reasonably safe:

-- They will be more user-friendly.

-- There will be clearer differentiation between those terms designed for use for all transport modes and those that can be correctly used only for vessel transport.

-- There will be fewer than the current 13 Incoterms 2000.

-- Use of Incoterms in domestic transactions will be encouraged and facilitated.

-- Issues that arose since 2000 such as cargo security and the new Institute Marine Cargo Clauses will be addressed.

-- The mirror-image format of dividing responsibilities between Sellers (Column A) and Buyers (Column B) will be retained.

-- There will be many significant changes from previous Incoterms versions.

Given the short window between anticipated release and effective dates, and today’s tight economy, savvy Incoterm users should make provision for training this fall. As the ICC’s U.S. affiliate organization, the United States Council for International Business will provide a quality cost-effective program.

Frank Reynolds is president of International Projects Inc. and represents the U.S. at the Incoterms 2010 revision. He can be contacted at usincoterm@aol.com.