Nine years after the 2010 version, the International Chamber of Commerce (ICC) launched the new edition of Incoterms 2020 by means of a press release on 10 September 2019. This update will come into effect on January 1, 2020.
The 2020 version does not contain any major changes. The main changes already mentioned in our previous article on Incoterms 2020 were presented on 25 September at a press conference organised by the ICC France committee.
The International Chamber of Commerce’s aim is to propose a document that is easier to understand and to remove doubts related to interpretation. The number of Incoterms still stands at 11 with their classification between “any mode of transport” (multimodal) and “maritime”.
One of the most important developments concerns the Incoterm DAT, which has changed its name to DPU. We provide a summary of the main changes and some explanations.
Distribution of Incoterms 2020
Incoterms 2020 are always categorized in two parts. Multimodal Incoterms are used when the contract covers one or more modes of transport (Air, Sea, Land and Rail). They also manage the transport in sea containers when the goods are handed over to the container park. Maritime or Inland waterway transport Incoterms are applicable when the collection and delivery points are ports. They can also be used for goods delivered to the shipping company along the ship or on board the ship at the port of embarkation.
The 7 rules applicable to multimodal transport
- EXW – Ex-Works
- FCA – Free-CArrier
- CPT – Carriage Paid To
- CIP – Carriage Insurance Paid to
- DAP – Delivered At Place
- DPU – Delivered at Place Unloaded (Incoterm DAT)
- DDP – Delivered Duty Paid
The 4 rules applicable to maritime or inland waterway transport
- FAS – Free Alongside Ship
- FOB – Free On Board
- CFR – Cost and FReight
- CIF – Cost, Insurance and Freight
The DAT becomes DPU (Delivered at Place Unloaded)
The Incoterm DAT (Delivred at Terminal) expands to become the DPU (Deliverd at Place Unloaded). The destination can be any place and not just a terminal. However, if the place is not a terminal, the seller must verify that the place where the goods are to be delivered is a place where he is able to unload the products.
Evolution of the FCA with an onboard bill of lading option
The new version of Incoterms 2020 provides for an evolution for the FCA rule with an on-board bill of lading option. An option of the FCA in case of payment via bank security: the buyer and the seller may agree that the buyer must instruct his carrier to provide the seller with the bill of lading bearing the mention of loading after loading the goods. The seller is then obliged to deposit this bill of lading with his financial institution for the buyer.
Insurance Incoterms CIP and CIF
Concerning transport insurance, Incoterms 2020 make a difference in terms of coverage. The Incoterm CIP requires all-risk coverage while the CIF requires minimum coverage (“FAP except” coverage). The insurance always covers at least 110% of the invoiced value.
FCA, DAP, DPU and DDP: transport with the seller’s or buyer’s own means
The 2020 version introduces the concept of own-account transport. The seller or buyer can use his own means of transport to transport the goods without necessarily calling on a transport professional.
Easier to use Incoterms
One of the main objectives of this revision is to make the rules more comprehensive in order to facilitate its use. The ICC wants to reduce misunderstandings in order to avoid disputes. The 2020 version now includes detailed instructions for choosing the Incoterms rule most appropriate for the transaction. It also provides clear information on the relationship between sales contracts, transport contracts, insurance and financing.
The guidance notes already present in the Incoterms 2010 are now presented as Explanatory Notes to each Incoterms rule.
CERL supports you in these developments!
CERL supports you in all your import and export transport operations. CERL teams are constantly on the lookout to prepare for these changes and provide the best possible support for our clients. For more information, please do not hesitate to contact a member of our team.