Incoterms 2010 – DAT and DAP

Posted by Posted date Featured Incoterms 2010 19 comments

The International Chamber of Commerce (ICC) has announced the launch of the new rule changes to Incoterms® 2010 which will be kicked off during a September event in Paris. The official implementation of the new rules are scheduled to take place during January of 2011.

On September 27th – 29th, the ICC will hold a series of practical masterclasses on the Incoterms® 2010 rules and provide a detailed presentation of the new rule changes that will be incorporated into the new Incoterms® 2010.

This revision, the first since 2000, will aim to adapt changes that have occured in global trade over the last ten years. According the ICC website, the reason for the changes include:

“The importance of cargo security, the resulting new obligations on traders, developments in container transport, and the 2004 revision of the United States’ Uniform Commercial Code, which resulted in a deletion of the former US shipment and delivery terms.”

Although the book has not been officially released, details on the ICC website show that the most glaring changes to the 2010 version will be the elimination of 4 Incoterms® including, DDU, DEQ, DES, and DAF. Two new terms will be added; DAT and DAP, bringing the new total of Incoterms® to 11.

Incoterms® 2010 will be arranged into the following groups:

Any Mode of Transport

CIP – Carriage and Insurance Paid
CPT – Carriage Paid To
DAP – Delivered At Place
DAT – Delivered At Terminal
DDP – Delivered Duty Paid
EXW – Ex Works
FCA – Free Carrier


Sea and Inland Waterway Transport Only

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

In addition to the 11 rules, Incoterms®2010 will include:

* Extensive guidance notes and illustrative graphics to help users efficiently choose the right rule for each transaction;
* New classification to help choosing the most suitable rule in relation to the mode of transport;
* Advice for the use of electronic procedures;
* Information on security-related clearances for shipments;
* Advice for the use of Incoterms® 2010 in domestic trade

This interpretation is provided as a guide only.

Incoterms® are published by the International Chamber of Commerce and are available on their website and official publication “Incoterms® 2010″. For a complete and official overview please refer to the ICC’s publication.

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  • Mukti Rai August 12, 2010 4:32 am edit

    New Incoterms seems intereting and useful to every business aspects.

  • 3plwire August 13, 2010 8:35 pm edit

    Mukti, I agree…definitely interesting. Being a logistics nerd, I can’t wait to get a copy of the official Incoterms 2010 publication when it releases in September.

  • corinne campbell October 25, 2010 10:02 pm edit

    I received the new Incoterms 2010 book. I am confused with the FOB term where some specialists are saying it should NOT be used for containers; I don’t feel the incoterms book is clear on that; Can anyone comment?

  • Rizwan October 29, 2010 12:42 am edit

    hi, can anyone provide me the link to download the full set of incoterm 2010. Really i would like to go through the whole terms.
    really appreciate.

  • Alberet December 10, 2010 2:10 am edit

    Did you mean that it will be released in Semptember 2011 ???

  • mahdi December 11, 2010 4:32 am edit

    Hello,
    the FOB term is not used for containers because It concentrates on the point where cargo is on board the vessel. That point is only important with loose cargo whereas with containers that can be loaded anywhere(shipper’s premises,dry ports,etc…) , it becomes irrelevant. Many use that terms with containers and even with air cargo shipments wrongly and as with the old saying goes ” old habits die hard”.

  • 3plwire December 16, 2010 8:45 pm edit

    Alberet,

    No, I meant that initial rollout of the new Incoterms would take place in September of 2010. The new incoterms go into effect in January.

    Rizwan,

    The International Chamber of Commerce has already released the new Incoterms 2010 in book form. Check out http://www.iccwbo.org.

  • 3plwire December 16, 2010 8:55 pm edit

    Mahdi,

    Not sure I follow you on this one. I don’t believe the Incoterm differentiates between a full container load and less than container load. The term FOB means that the seller delivers the goods once the cargo has passed the ships rail at the named port of export. The loading location of the cargo is irrelevant. If the seller makes the goods available at their facility, loaded in a container, then the FCA term would make more sense. I do agree that the FOB term cannot be used for air shipments.

  • nathan78 December 22, 2010 4:35 am edit

    do you think was it neccesarry to make a new revision at incoterms?

  • Ahmed Sirag January 3, 2011 9:53 pm edit

    quick review, ship’s rail is no longer considered as a critical point

  • 3plwire January 3, 2011 10:41 pm edit

    Ahmed,

    Just curious why you say that the ship’s rail in no longer considered relevant.

  • Diana March 14, 2011 10:41 pm edit

    “Ship’s Rail” terminology is no longer mentioned for FOB the reference is now “loaded on board the vessel”. When the ICC first wrote their guidelines for the use of the term in 1936, the ship’s rail was often still relevant, as goods were often passed over the rail by hand . In the modern era of containerization, the term “ship’s rail” is somewhat obsolete…so For FOB, CFR and CIF, goods are regarded as having been defivered as soon as they are “on board” the vessel, and not as previously, at the reeling of the ship. Under these three Incoterms® rules, all mention of the “ship’s rail” as the point of delivery has been omitted in preference for the goods being delivered when they are “on board” the vessel.

    Also, FAS, FOB, CFR, CIF are no longer recommended for containerized shipments because these are meant for cargo that are truly delivered by the seller (or appointed agent/trucker) to the actual vessel side or onboard the vessel. Containers are now considered delivered once they are gated-in the port and then are staged into a slot for loading later….so truly the seller doesnt have any control of their container inside the port as they are not the ones loading the vessel…

  • Mario Santa Cruz May 12, 2011 8:12 am edit

    I have some direct shipments from different sources of the world, I send the product from origin country to destination with DAP incoterm , When I receive the supply invoice need to reinvoice and send my bill to my customer. My question is Do I need to wait until the container arrive to destination or can Invoice before the vessel arrive to destination port, (Taking about risk traslation)?

    Please send me your comments.

  • Sha Othman July 13, 2011 11:10 am edit

    Hi Mario, the shipping term and payment term should be decoupled. The incoterm is the term of sales with the buyer/customer. You didn’t mention the shipping term for the sales between you (as the buyer) with your supplier. Are you buying and selling back-to-back? Anyway, incoterm provides a set of international rule for the interpretation of the trade terms. It defines the responsibility of buyer and seller in term of delivery cost (incl.insurance, handling etc), risk and title transfer of goods. The title transfer of goods is crucial as this represent the transfer of ownership of goods title to the buyer and for “D” incoterm it is never at the loadport. The transfer of ownership is at unloading place at destination of the ship-to party location or discharge port nominated by the buyer in the sales agreement/contract. This translate to the fact that there should not be any goods issue to the end customer happening in your system until confirmation has been received that the goods has arrived destination. The payment term however is the condition as to when the payment of the goods or services need to be effected. If payment term to this DAP customer lets say open account 15 days from bills of lading date. You should invoice your customer as soon you have received the sailing advice at origin port with the final quantity shipped (as stated in the bills of lading and the BOL date which will be the date of the invoice is issued. You will need to consider how you can retain the visibility of the stocks in the system until the transfer of ownership happens. This is so that you can assess your exposure and manage risk in the case the customer goes bankrupt while the goods is still in transit and payment due date is not up. Have you heard of pre-payment billing or downpayment billing (similar to proforma invoice generation). which only needed to be reference against a sales order without having a delivery document processed and goods issued, before a billing document can be generated. DAP term shipments need to be processed in this manner to protect yourself.

  • P.ALATE October 28, 2011 4:40 am edit

    DAP – does this mean delivered at place including duty paid or it is cost + transportation cost to final destination ?

    FCA – “free Carrier” does this mean only 1st cost at the point exit airport ?

  • Joel June 6, 2012 4:47 am edit

    Just to ask further along the above query on DAP- freight and insurance is at shippers cost, but will those cost still be used to calculate docket prices at point of import? Or are docket prices under DAP limited to invoiced value?

    Thanks in advance.

  • KEITH BLOND October 11, 2012 4:12 am edit

    P.Alate ; your question on DAP.
    Firstly, a “D” prefix is usually confined to in house movements like MERC TO MERC. It is a buers first choice but it prejudcies the seller. UNDER DAP… delivered at named place, which can be inland from the arrival Port, the seller will only get paid when the goods are delivered but under CPT [ same thing.. named place] his payment is triggered once the cargo leaves his warehouse.
    Why would a seller wnat to expose himself by accepting DAP terms

    Second Point: DAP, does not include DUTY AND TAX’S [ THIS IS COVERED BY DDP. But alwasys the seller should modify his terms by stating " excluding VAT" - WHY? - cause he can't claim it back unless he has a company registered in the country of delivery]
    DAP, will include harbor cost and cartage to get the cargo to the named place. IT also has a downside cause there are now two agents involved.
    ONE to pass the Harbor documents and one who passes the customs bill of entry.

  • Fazal Furqani April 8, 2013 1:30 am edit

    As a buyer we want to ask for DAP but the seller is not able to arrange on-carraiage from port of arrival to the final distination. What a proper note that could be added to DAP in the Purchase Order to allow buyer to arrange transporation, with the final risks to be transferred only after delivery to the final destination?

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