New Incoterms – Businesses need to know new shipping rules

New Incoterms – Businesses planning to export and import in 2011 need to be aware of new rules introduced this month affecting the sale and movement of goods worldwide.

Nicole Howarth, managing director of Telford-based Global Freight, said the new Incoterms rules, introduced on January 1 2011, affect every business which wishes to transport goods, regardless of the size of the consignment.

Brought in to help regulate shipping and simplify the complexities of trading abroad, the Incoterms are an international standard regulating the costs, risks and practical arrangements of buying and selling goods and services with regard to their transport.

Nicole explained: “These are the first significant changes to Incoterms in the last ten years, seeing four rules abolished and two new rules introduced, including new regulations concerning cargo security and insurance.

“Although the Incoterms have been reviewed to make the transportation of goods easier to understand, it is vital that companies are aware of the rules or they could find themselves experiencing problems ranging from bearing extra cost to being exposed to increased risk over security clearances.”

The rules surrounding security and the scanning of containers have not been changed, though both sellers and buyers are now required to provide extra information to allow the import and export of goods and to enable carriers and freight forwarders to transport them.

“The rules reduce or remove uncertainties arising from different interpretations of commercial terms by specifying the obligations of seller and buyer, besides indicating who bears what costs, when and how the property passes and when the risk passes from seller to buyer.”

Nicole, who also offers a consultancy service to companies trading internationally, said it was vital companies interpreted the new regulations correctly.

She added: “In the past, we have been called in to help when companies have experienced problems with exporting goods, and most of the time it’s because the paperwork has been wrongly completed or the incorrect procedures followed. It is always more cost-effective to get everything in order from the start, especially considering the introduction of new regulations which companies may not be familiar with.

“New rules should be specifically incorporated into the relevant contract otherwise they will be void. Also, businesses exporting and importing should make sure the wording in the contract is correct otherwise they risk potentially expensive mistakes.”

Experts in export, import and cross trade delivery, contracting and packaging by air, sea or road, Global Freight can provide extensive guidance and advice on the new Incoterms.

The company can help users efficiently choose the right rule for each transaction, help choose the most suitable rule in relation to the mode of transport, advise on the use of electronic procedures, provide information on security-related clearances for shipments and advise on the use of Incoterms 2010 in domestic trade.

To download a copy of the guidelines please click this link: NEW INCOTERMS 2011