Everything you need to know about Incoterms 2020 - what’s in, what’s out and more importantly, what it means for your orders in 2020 and beyond.
Incoterms have been around for 100 years in both international and domestic sales contracts and help reduce any misunderstandings by clearly setting out the responsibilities of both the buyer and the seller and the point at which the transfer of risk occurs.
There are few changes that have been made in Jan 2020 but all of you may not be aware of the changes that have been made. Since Jan 1st all-new transactions should now be following these updated terms.
Now looking at the abbreviations, you may not be able to spot what has been changed. So, here is a quick overview of what’s new.
For those of you have an eye for detail, the most obvious change is the renaming of Delivered at Terminal (DAT) to DPU (Delivered at Place Unloaded). The main reason for this is that a “Terminal” isn’t always where the buyer and/or seller want the goods to be delivered so DPU now allows for this flexibility.
CIP (Carriage & Insurance Paid To) and CIF (Cost, Insurance & Freight) are now more defined with different levels of insurance coverage required for export. There are no changes to seller requirements for CIF in which only the minimum coverage is required under Clause A of the Institute Cargo Clauses but for CIP, at least 110% of the value of the goods must now be covered by the seller under Clause C of the Institute Cargo Clauses.
Some changes have also been made to the requirements of the term FCA (Free Carrier) in which the buyer must arrange for the carriage of goods at their own cost and risk. The seller is then responsible for loading the goods on to the transport provided.