A BRIEF OVERVIEW OF INCOTERMS
Incoterms is a standard set of rules creating in the year 1936 by International Chamber of Commerce (ICC) which is used by the traders, buyers, sellers, banks, governments and indeed anyone involved in the supply chain of delivering goods. In general, Incoterms covers the tasks involved in shipping, responsibility of risks, insurance duties, customs clearance and taxes.
It should be noted that some specific terms have particular meaning within Incoterms e.g. Delivery, Carrier, Freight Forwarder which means a firm involves in the making of shipping arrangements, Terminal i.e. any places such as dock, container, rail cargo and warehouse, To Clear for Export means to file shipper’s export declaration and obtain export permit.
Further, Incoterms has several rules’ models for any transportation such as Ex Works, FCA (Free Carrier), CPT (Carriage Paid To), and DDP (Delivered Duty Paid). Although, the most common usable Incoterms rules is related to sea and inland water path transport such as FOB (Free on Board) in which the seller should bear all costs and risks up to the point of loading the goods on vessel in port of export and CIF (Cost, Insurance & Freight) in which the seller has the main responsibility of FOB plus carriage the goods to port of import as well as an insurance.
It is also manifest that the risks/costs is not regularly the same in different models, as an example, in DAT (Delivered at Terminal), DAP (Delivered at Place) and DDP (Delivered Duty Paid) the seller and buyer both have liability for insurance or in CPT (Carriage Paid To), CFR (Cost & Freight), CIF (Cost, Insurance & Freight) and CIP (Carriage and Insurance Paid To) both buyer and seller shall bear unloading the goods in port of import.
Considering the above, it is noteworthy that a new revision of Incoterms is under process which aims to simplify the rules in the near future to come (by some chance the year 2020).
The drafting committee of current Incoterms is willing to harmonize conflicting commercial terms and revising key areas in Incoterms 2010 rules. Therefore, it is anticipated that several critical areas will be considered during the revision process of Incoterms such as cyber-security threats, financial and sensitive information theft. Subsequently, the mentioned attacks have been certainly recognized in the maritime supply sector which committed by cybercriminals via opening the unsafe browsers, phishing scam, etc.
Respectfully submitted by Dr. Mahnaz Mehrinfar & Ms. Roza Einifar