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The new Incoterms 2020 are coming

The International Chamber of Commerce (ICC) has released a new version of Incoterms 2020 after ten years. At the beginning of January, the next edition of these most used documents in international forwarding and transportation will come into force. We will introduce you the main changes they bring.

Incoterms are a set of international interpretative rules that define the place of delivery, liability, risks and costs of the seller and the buyer. They are not legal in nature and become binding only if they are expressly referred to in the contract by the parties to the contract. The rules state which of the contracting parties is obliged to ensure transport or insurance, when the seller delivers the goods to the buyer and the costs borne by each party. On the other hand, Incoterms do not give any information regarding the price of the goods, how they were paid, and the transfer of ownership to the goods or the consequences of the breach of contract.

Key changes in the Incoterms 2020 rules:

FCA: if the FCA rule is applied during the delivery of goods to the port of shipment, the seller is also entitled to receive the Bill of Lading from the ship-owner. This procedure must be agreed between the seller and the buyer in advance. At the same time it is necessary to mention this fact in the purchase contract concluded between the seller and the buyer.

DAT: this rule is no longer present in Incoterms 2020 and is replaced by the Delivered at Place Unloaded (DPU) rule. The place of delivery may be any place as agreed between the seller and the buyer. It is not necessary that the place of delivery is a terminal or dock as required for the DAT rule in Incoterms 2010.

CIP: the scope of insurance has changed. At their own expense, the seller is obliged to provide insurance coverage to the extent corresponding to clause (A) according to the Institute Cargo Clauses (LMA/IUA). Previously, it was necessary to ensure coverage only under clause (C). For the CIF rule, this does not change and the coverage obligation under clause (C) remains valid.

In general, the new Incoterms 2020 publication tries to be more user-friendly and simpler. the particular rules are certainly better and more comprehensible explained using restructured graphics.

If you have any questions about the new terms and conditions, our customers can contact regional customer centres.