Incoterms 2020

As from the 1st of January the new Incoterms are effective; these trade terms are key elements of international contracts of sale.

The International Commercial Terms are worldwide known as ICC Incoterms. They were created in 1936 to reflect the rights and obligations of the buyer and seller in international trade. ICC periodically reviews the rules. These are the main changes from the latest version, Incoterms 2010.

  • The former Delivered at Terminal (DAT) has been changed to Delivered at Place Unloaded (DPU) to emphasise that the place of destination can be any place and not just a ‘terminal’ and to underscore the sole difference from Delivered at Place Unloaded (DPU) – under DAP the seller does not unload the goods, under DPU, seller does unload the goods.
  • Under Incoterms 2010 it was assumed that shipments were always collected or delivered by thirds party carriers. Under Incoterms 2020 there are now provisions for buyers and sellers that want to use their own transportation for the carriage of the goods. For the seller, these can be found in the D rules, like DPU or DDP. For the buyer, these can be found under the FCA rule.
  • The Incoterms 2020 rules provide for different levels of insurance coverage in the Cost Insurance and Freight (CIF) rule and Carriage and Insurance Paid To (CIP) rule. Under the CIF Incoterms rule, which is reserved for use in maritime trade and is often used in commodity trading, the Institute Cargo Clauses (C) remains the default level of coverage, giving parties the option to agree to a higher level of insurance cover. Taking into account feedback from global users, the CIP Incoterms rule now requires a higher level of cover, compliant with the Institute Cargo Clauses (A) or similar clauses.
  • Free Carrier (FCA) has been revised for Incoterms 2020 to cater to a situation where goods are sold FCA for carriage by sea and buyer or seller (or either party’s bank) requests a Bill of Lading with an on-board notation. FCA in article A6/B6 now provides for the parties to agree that the buyer will instruct the carrier to issue an on-board Bill of Lading to the seller once the goods have been loaded on board, and for the seller then to tender the document to the buyer (often through the banks).

While Incoterms 2020 is the most current version of the trade terms, Incoterms 2010 is still in effect today and can be accessed. However, it must always be indicated under which Incoterms goods are transported.

Would you like to receive an overview of the new Incoterms 2020? Please leave your details and we will send you the hand-out by mail.




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