The Quest
January 2011 - Issue 70
Inside this issue:
ISF enforcement:
Where we are now

Disaster in Japan: Avalon assists in aid, BCP reminder

CBP updates: Bond insufficiency, new address for mailing checks

FMCSA elimination of Cargo Insurance, BMC-32 takes effect March 21
CSA motor carrier
ratings now in force

New ACORD form changes how logistics providers
verify insurance

Revised Incoterm rules
take effect

UAE joins ATA
Carnet system

Claims corner:
Worldwide Coverage



Revised Incoterm rules take effect
Transactions in international trade are often complex. To ensure consistent interpretation of trading rules and responsibilities, the International Chamber of Commerce (ICC) created “Incoterms,” a series of standard trading terms outlining the tasks, costs and risks involved in the delivery of goods from sellers to buyers.

To keep pace with trends in world trade, Incoterms are revised approximately once a decade. The newest version, Incoterms® 2010, took effect on Jan. 1, 2011. Understanding the new Incoterms® 2010 rules is crucial for accurate negotiation of sales contracts and to determine the financial interest in insuring shipments.

Changes to Classification and Number of Terms
Previous versions of Incoterms grouped items into four categories: E, F, C and D. Now, the terms are now separated into two groups: those available for all modes of transport, and those only applicable to sea and inland waterway transport. The complete list of Incoterms now includes:

Any Mode of Transport

Sea and Inland Waterway Transport Only

EXW – Ex Works

FAS – Free Alongside Ship

FCA – Free Carrier

FOB – Free On Board

CPT – Carriage Paid To

CFR – Cost and Freight

CIP – Carriage and Insurance Paid To

CIF – Cost, Insurance and Freight

DAT – Delivered at Terminal


DAP – Delivered At Place


DDP – Delivered Duty Paid


It is important to note that the total number of terms decreased from 13 to 11. There were two new additions (DAP, DAT) and four deletions (DAF, DDU, DEQ, DES). The ICC noted that the previous D-terms were similar, which resulted in confusion on what term to use. Both new terms DAP and DAT may be used in any mode of transit. The only D-term that was left unchanged is DDP – Delivered Duty Paid.

DAP (a new D-term that stands for “Delivered at Place”) replaces DAF, DES and DDU. Of the previous terms, DDU is most similar to the new DAP term. Under DAP, goods are delivered at the named destination, but not unloaded or import cleared. Goods are delivered to the named destination with the seller bearing all risks and costs (other than applicable import costs).

DAT stands for “Delivered at Terminal” and replaces DEQ. DAT is primarily used for containerized goods, which are delivered, unloaded and placed at the buyer’s disposal at the named destination, which may be a port. Goods are delivered with the seller bearing all risks and costs (other than applicable import costs) to the named destination.

Cargo Insurance Requirements
Obligations to obtain Cargo Insurance were also updated with the new rules. Now, when using the CIF term, the seller must obtain coverage with at least ICC-C minimum clauses. ICC-C coverage is similar to the American Cargo Insurance term “Free of Particular Average (FPA).” In addition, the seller must secure additional coverage when required by the buyer, such as ICC-A, which is similar to the American Cargo Insurance term “All-Risk.”

When using Incoterms® 2010 in contracts, trading documents should note the particular Incoterm, the location and the updated 2010 version. For example, a commercial invoice should state “FCA Chicago, United States, Incoterms® 2010.”

Avalon continues to make the issuance of Cargo Insurance as simple as possible for you. We work with strong insurance markets and have the highest service standards for answering your questions and processing claims when they do occur. Our flexible policies allow our customers to insure most commodities immediately, with a 24-hour turnaround time for those requiring Special Quotes. With our Cargo Insurance program, you receive competitive rates, marketing support and exclusive Merlin technology to streamline certificate issuance.

For more information, please contact your local Avalon office or Andriana Davis at (847) 700-8087 or at adavis@avalonrisk.com. A list of our offices may be found at www.avalonrisk.com.

Avalon Risk Management
150 Northwest Point Boulevard | 4th Floor | Elk Grove Village, IL 60007
Phone: (847) 700-8100 | Fax: (847) 700-8116



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