I can’t tell you how many times lately that I have repeated the phrase “uncertainty is certain” in reference to the coming year. This uncertainty was brought about by change, and I am more than certain that it will continue to feed into change.

One of the changes for 2011 is the newly revised International Commercial Terms*, or “Incoterms.” These changes and why it is so important to understand them are outlined in the Supply Chain Consortium’s new hot topic report, International Shipping and Incoterms.

Four terms were eliminated (DAF, DEQ, DES, and DDU), while two were added (DAP and DAT). The modifications – which went into effect January 1, 2011 – define obligations, risk transfer, and cost sharing for the seller and buyer. They represent substantial clarification for the application of the 11 individual terms, consistent with the way global trade is actually conducted since the last update in 2000.

While it’s key to understand these revisions, it is also a best practice to periodically review freight terms as volume changes or lanes become more predictable. This process may be easily incorporated into the freight bid process to ensure that companies take advantage of the price/risk continuum, or, at least, fully understand the big picture.

For more information on the Incoterms changes and the results of an industry survey on international shipping, you can read the International Shipping and Incoterms Hot Topic Report.

What changes are you adjusting to in 2011? Does it involve modifications in shipping freight?

Go!Go!Go!

Jim

*International Commercial Terms are a series of international sales terms, published by International Chamber of Commerce (ICC) and widely used in international commercial transactions.

Photo Credit: rhysasplundh