Incoterms 2010 – DAT and DAP

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.

Container volumes surge

Don’t expect the container shortage crisis let up anytime soon. According to a report from the TSA website, container volumes on the Transpacific trade lane showed a first quarter increase of 13% when compared to the same time period in 2009. The TSA carriers reported a total 1st quarter container volume of 1.27 million FEUS from Asia to the US.

Via TSAcarriers.org:

“Neither shippers nor carriers were certain as to what direction the market would take coming out of the Lunar New Year holidays,” said Eng Aik Meng, APL Ltd. President, Liner. “Now it appears that the worst is behind us. Despite a pull-back in U.S. job creation and retail sales in May, the pipeline of Asian exports to the U.S. is filling rapidly and consumers are more optimistic over job security and household incomes going forward.” Mr. Eng emphasized that, while headlines have focused on peripheral issues such as European debt and U.S. tax and regulatory developments, many of the underlying fundamentals in the U.S. economy are positive: industrial production and durable goods orders are up, trade is expanding, inflation is low.

Revenue, however, continues to be a sticking point with the carriers. Many carriers faced record losses in in 2009 with the carriers losing a combined $15 billion.

While revenue gains made by carriers in recent months have made an important contribution to carrier balance sheets, carriers say the increases achieved in the current contract round still do not fully restore rates to the levels of late 2008, let alone provide for long-term viability and service expansion. In addition, to cover the costs of the expected robust peak season, individual TSA lines reaffirmed implementation of a previously announced Peak Season Surcharge.

TSA carriers are moving forward with aggressive plans to implement a Peak Season surcharge of $400 per FEU effective August 1. However, many carriers have already implemented a peak season surcharge effective in June.

Airfreight Shows Continued Improvement

Global airfreight demand continued to show improvement during the month of March. According to a recent report from IATA.org, demand for airfreight increased 28.1% compared to March of 2009. While the signs are positive and point to a continued recovery in global airfreight, the March numbers are compared to same time period in 2009, which was near the low point of the recession.

Via IATA.org:

“March results show that the pace of the upturn is strong. But the trauma of the recession is not over. The industry has lost two years of growth, and passenger and freight markets are still 1% below early 2008 highs. Nonetheless, the pace of improvement, based on an improving global economic situation, is much faster than anybody would have expected even six months ago,” said Giovanni Bisignani, IATA’s Director General and CEO.

The good news is that global airfreight is now within 1% of it’s high in early 2008. I would expect the cargo numbers to dip slightly in April due to the Icelandic volcanic eruption which shut down European air travel for 6 days.

Nearly all regions showed outstanding growth, with the Latin America region leading the charge with a 47.9% increase. Despite the continued sluggish U.S. economy, U.S. airfreight grew 32.2%.

Lets hope this is a sign of good things to come for the remainder of 2010. According to some of my colleagues on the freight forwarding side of the business, airfreight space out of Hong Kong is extremely tight and rates are on the rise.

American Airlines Expands Business ExtrAA Program

American Airlines introduced their redesigned Business ExtrAA program today, which allows cargo customers the opportunity to earn travel awards for booking cargo shipments. The redesigned program allows cargo shippers to earn travel awards for all shipment regardless of booking. The prior program allowed shippers to earn points for shipments booked online only.

Via www.aa.com:

“At American Airlines Cargo we are focused on maintaining and rewarding customer loyalty. We believe the enhanced Business ExtrAA program for AA Cargo provides an excellent way to add value and to let our customers know how much we appreciate their business,” said Dave Brooks, President – American Airlines Cargo Division.

Customers can earn 2,000 points for every $40,000 USD in eligible shipping revenue on American Airlines up to an annual maximum of 200,000 points.

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