As mentioned earlier that from 1980 onwards, ICC announced that there will be modification made to INCO term in every 10 years, despite INCO term 2000 which the author shares his point of view that it could be the best INCO term ever, is still workable. Since working group of ICC would have to observe such mandate, the INCO term was modified and hence, implemented INCO term 2010 in replacement to INCO term 2000
The reason for this change given by ICC is all about the change of international trading atmosphere, consisting of 3 main reasons :-
- Global development, by ways of :-
- Establishment of customs free zone in many countries
- Change of transport practice
- Security for movement of goods
- To Update and consolidate
- Explain and reflect
Therefore, INCO term 2010 emphasized on the mode of transportation, focusing on main international transportation not inland transport locally made within countries of origin or destination. They categorized INCO term into 2 categories with 11 terms, apparently each category indicated mode of transportation.
Those 2 categories are as follows :-
Category 1 – Rules for any mode of transport, consisting 7 terms :-
- CIP – Carriage and Insurance Paid to – same definition as of INCO term 2000
- CPT – Carriage Paid To – same definition as of INCO term 2000
- DAP – Delivery At Place – means price of goods including carriage of goods to designated place
- DAT – Delivery At Terminal – means price of goods including carriage of goods to designated terminal
- DDP – Delivery Duty Paid – same definition as of INCO term 2000
- EXW – Ex Work – same definition as of INCO term 2000
- FCA – Free Carriage – same definition as of INCO term 2000
Category 2 – rules for sea freight and inland waterway transport only, consisting of 4 terms :-
- CFR – Cost and Freight – same definition as of INCO term 2000
- CIF – Cost + Insurance + Freight – same definition as of INCO term 2000
- FAS – Free Alongside Ship – same definition as of INCO term 2000
- FOB – Free On Board – same definition as of INCO term 2000
Apparently, some terms had been deleted and some terms were added in. Let’s take a closer look which ones disappeared and which ones were added.
Terms that were deleted are : DAF DES DEQ and DDU, with the respective reasons of elimination :-
- DAF was used only for surface or road transportation. Countries likely used this term are in Europe where as there are many frontiers to connect the countries, however, the term was not actually put in effect since there was the merging of countries in such continent to be EU and reflected the very convenient and convincing cross border form one country to another without any stop of vehicle for checking any longer
- DES was considered to be a kind of double task because as soon as the vessel berth at the port of destination, it would be the common duty of liners and port to uplift the cargo off the vessel deck and checked in as import goods, no more waiting since the vessel should also leave for next destination. In the past, this term may be practical only in case that the cargo was too heavy or bulky that onboard or port gantry crane could not operate the lifting, importer should hire or deploy their own offloading facility at their own cost and risk. Later found such case was too rarely happened because acceptance of cargo at port of origin should have known the capacity of port of destination as well, should there be such kind of special equipment usage, charge should be added-on, inclusive with freightage by the time of booking and consider to be CFR term, therefore, this should be terminated.
- DEQ – in connection with DES, once cargo arrive at port of destination, there is no reason to keep the goods inside the port area, consignee should take delivery of the goods, why should the very short movement from inside port to outside area be so considerable. As the matter of fact, it was noted that during 10 years of practice, only Bangladesh was using this particular term, but with the definition that the freight rate quoted will be including destination terminal handling charge, consignee would not have to pay any terminal charge again while taking the final delivery. With such very limited usage, the term should be eliminated.
- DDU – there had been some controversy in real practice if customs clearance fee would be part of the term. Actually, it was theoretically not included, importer should be responsible to pay customs clearance, transporter or freight forwarder only did the delivery job. However, somewhere, somehow still insisted on the notion that if the goods was not cleared from customs, how could delivery be made. Therefore, in order to eliminate all disputes, this term was deleted.
2 terms are added in INCO term 2010 which are :-
- DAP – Deliver At Place – price of goods included delivery fee up to designated place.
- DAT – Deliver At Terminal – price of goods included transference of goods to designated terminal.
However, what would be the real definition of ‘place’ and ‘terminal’ – this issue will be in next part.