What are Incoterms®?
Incoterms® rules provide a specific guide to all importers and exporters of their obligations, costs and risks involved in the transportation of goods.
On January 1st 2020, the International Chamber of Commerce (ICC) issued the new Incoterms® 2020 rules that are the new terms of international trade for sale of goods.
Incoterms® 2020 outlines the differences between Incoterms® 2010 and how best to use the new rules within your contract of sale with a clear expectation of each rule.
On January 1st 2020, the International Chamber of Commerce (ICC) issued the new Incoterms® 2020 rules that are the new terms of international trade for sale of goods.
Incoterms® 2020 outlines the differences between Incoterms® 2010 and how best to use the new rules within your contract of sale with a clear expectation of each rule.
What are the main changes?
- DAT has been renamed to DPU to emphasisse the place of destination can be anyplace and not just a “terminal”. Under DAP the seller does not unload the goods, under DPU the seller does unload the goods.
- Incoterms® 2020 allows for different levels of insurance coverage in CIP and CIF. The Institute Cargo Clauses (C) remains as the default level of coverage in CIF. CIP requires a higher level of coverage. This rule requires the seller to take out maximum insurance cover under Institute Cargo Clauses (A) or similar, for the buyer’s risk. The seller must give the buyer any insurance document the buyer will need in case it must claim under that insurance.
- Incoterms® includes clearer and more detailed security obligations on carriage and import/export clearance, also listing costs relating to these requirements.
- Incoterms® 2020 has revised where goods are sold FCA by sea that buyer or seller request a Bill of Lading and an on-board notation. The buyer will instruct the carrier to issue a Bill of Lading to the seller once the goods have been loaded on board, then the seller will tender this document to the buyer.
- A new section of cost has been included. Incoterms® 2020 includes a full list of expected costs at a glance as well as listing associated costs per item to allow for users to look at specific aspects of the sale transaction.
- Incoterms® 2020 also recognises that not all sales transactions use a third-party carrier. The seller can user their own transportation or the buyer can collect goods using their own transportation.
For full version and details of Incoterms® 2020, refer to www.iccwbo.org
