INCOTERMS 2023
In international trade, INCOTERMS (International Commercial Terms) are a set of internationally agreed-upon rules that govern the responsibilities, risks, and costs between the seller and buyer in the process of shipping goods. INCOTERMS are crucial as they help avoid ambiguity and disputes in cross-border trade. In 2023, the International Chamber of Commerce (ICC) released the latest version of INCOTERMS, called INCOTERMS 2023, replacing the previous version, INCOTERMS 2020. This article will discuss the key changes in INCOTERMS 2023.
What are INCOTERMS?
INCOTERMS stands for International Commercial Terms, a set of international rules used in international trade contracts. These rules clearly outline the division of responsibilities between the seller and buyer regarding the shipment of goods, including transportation, insurance, and payment. They ensure that all parties involved understand their roles in international trade transactions.
Major Changes in INCOTERMS 2023
- Addition of the term "CNI" (Common Notarial Instrument): INCOTERMS 2023 introduces a new term, "CNI," referring to the Common Notarial Instrument. This is a document created by a notary and used in certain INCOTERMS rules to authenticate or verify specific documents or information.
- Emphasis on the use of "Electronic Bill of Lading" (e-B/L): In INCOTERMS 2023, the use of electronic Bills of Lading is emphasized. This reflects technological advancements in international trade, where documents such as Bills of Lading can be stored and transmitted electronically.
- Clarity on "Container Yard" and "Terminal Port": INCOTERMS 2023 provides clearer definitions of the terms "Container Yard" and "Terminal Port" to avoid confusion. This is important as the proper use of these terms can impact the location of goods pickup or delivery.
- Elimination of "Delivered Duty Unpaid" (DDU) and "Delivered Duty Paid" (DDP): INCOTERMS 2023 removes the terms DDU and DDP to reduce ambiguity in the rules and encourages the use of more specific rules such as Delivered at Place (DAP) and Delivered at Terminal (DAT).
- Emphasis on Insurance Responsibility: INCOTERMS 2023 clarifies that insurance responsibility lies with the seller in the Carriage and Insurance Paid To (CIP) rule and with the buyer in the Cost, Insurance, and Freight (CIF) rule. This avoids disputes related to insurance in international trade.
Conclusion
INCOTERMS 2023 represents a significant update in international trade rules. These changes reflect developments in technology and clarify aspects that could previously cause confusion. For international business practitioners, it is essential to understand these changes and integrate them into their trading practices. With a solid understanding of INCOTERMS 2023, business professionals can reduce risks and ensure the smooth execution of cross-border trade transactions.
