Incoterms 2020: the main changes
The new Incoterms 2020 have been published by the International Chamber of Commerce (ICC) and come into force on 1 January 2020. This means that if a contract is entered into on or after 1 January 2020 then it is likely that Incoterms 2020 shall apply unless the contract states otherwise.
What are Incoterms?
Incoterms were first developed in 1936 by the International Chamber of Commerce (ICC) in attempt to simplify international trade by providing a standard set of rules and interpretations for international commercial transactions. There are 11 Incoterms identified and 11 stages of the international commercial transaction between Buyer and Seller. They deal with:
- Who is responsible for dealing with each stage of the international journey.
- Who is responsible for arranging Insurance, customs and payment of duties.
- Who is responsible for organisation of freight and transportation, at origin and destination
- Who is responsible for documentation and what documentation is required.
What are the main changes in Incoterms 2020?
There are seven (7) keys changes to the 2010 Incoterms, specifically:
- DAT Incoterm changed to DPU
- Change of insurance in CIP/CIF
- Costs are clarified
- Security in relation to transport is now clearly detailed
- Provisions to allow for own transport rather than assuming 3rd party transport
- FCA, FOB and Bills of Lading
- Presentation and design is much more user friendly
What should I do about these changes?
Consider what Incoterms your business typically uses and whether the Incoterm is no longer suitable. If you are finding the Incoterms a bit baffling, why not consult with your Trade Link representative for assistance in identifying the changes that may impact your international contracts.
Download TradeLink’s summary of Incoterm’s 2020 which sets out the obligations of Buyer and Seller for each Incoterm and at each stage of the international journey/transaction.
Contact us to learn more…