Cargo security regimes have assumed much greater prominence since 9/11 and other terrorist incidents. These regimes are codified by framework protocols such as ISPS (International Ship and Port Security), which has been incorporated into SOLAS (International Convention for the Safety of Life at Sea) by way of amendment.
The most obvious practical consequences for buyers and sellers are extra carriage costs which will be billed under headings such as Carrier Security Fee, ISPS Container Charge and Terminal Security Fee.
There may also be security-related costs associated both with the export clearance process and the import clearance process.
The Incoterms 2010 revision had very little to say on this subject.
However the Incoterms 2020 revision makes reference to these costs in A4/B4 and in A7/B7 for each rule.
The analysis is fairly straightforward.
- The most common cost headings are those associated with transport, and these are the responsibility of the party who arranges this.
- Security costs associated with export clearance will be borne by the seller (except for Ex Works).
- Security costs associated with import will be borne by the buyer (except for Delivered Duty Paid)