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Incoterms® 2020

Incoterms® 2020 are pre-defined commercial terms by the International Chamber of Commerce (ICC). They are widely used in international commercial transactions or procurement processes. Incoterms® are the rules that define responsibilities of buyers and sellers in international trade. They provide guidance for determining how costs and risks are allocated to the parties. Incoterms® rules are regularly incorporated into contracts for the sale of goods worldwide and have become part of the daily language of trade.

The latest version, Incoterms® 2020 takes into account latest developments in commercial practice and will come into effect on 01.01.2020.

Incoterms® is a registered trademark of the International Chamber of Commerce (ICC).
The two main categories of Incoterms® are organised by modes of transport. The aim is to clearly stipulate the obligations of buyers and sellers.

Group 1. Incoterms® that apply to any mode of transport are:

EXW
Ex Works
FCA
Free Carrier
CPT
Carriage Paid To
CIP
Carriage and Insurance Paid To
DAP
Delivered at Place
DPU
Delivered at Place Unloaded
DDP
Delivered Duty Paid

Group 2. Incoterms® that apply to sea and inland waterway transport only:

FAS
Free Alongside Ship
FOB
Free on Board
CFR
Cost and Freight
CIF
Cost, Insurance, and Freight
For further explanation of Incoterms® 2020 and specific advice please contact your Key Account Manager at Harders.

Incoterms® help importers and exporters around the world to understand their responsibilities and avoid costly misunderstandings, the rules form the language of international sales transactions.

The most important changes from the previous Incoterms® 2010 are:

  • DAT (Delivered at Terminal) is changed to DPU (Delivered at Place Unloaded), which means that any (agreed) location can be the destination in the future and not only a “terminal”.
  • FCA (Free Carrier) now provides the additional option to make an on-board notation on the Bill of Lading prior loading of the goods on a vessel. Buyers and sellers can agree that the buyer instructs his carrier to issue the seller with an on-board bill of lading after loading the goods. At the same time, the seller is obliged to hand over this on-board bill of lading to the buyer.
  • CIP now requires at least an insurance with the minimum cover of the Institute Cargo Clause (A) (All risk, subject to itemised exclusions).
  • CIF requires at least an insurance with the minimum cover of the Institute Cargo Clause (C) (Number of listed risks, subject to itemised exclusions).
  • Free Carrier (FCA), Delivered at Place (DAP), Delivered at Place Unloaded (DPU) and Delivered Duty Paid (DDP) now take into account that goods may be moved by using its own means of transportation, without engaging a third-party carrier.
  • The Incoterms® 2020 explicitly shifts the responsibility of security-related requirements and ancillary costs to the seller.
Incoterms® do not constitute a complete contract of sale, but rather become part of it. Please talk to your Account Manager at Harders for more information.

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