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Incoterms 2020 – A look at the latest changes to Incoterms
The ICC has launched Incoterms® 2020, the newest edition of the globally recognised trade terms for the delivery of goods, providing certainty and clarity to business and traders.
First introduced in 1936, the ICC have not been ignorant to changes in global economy, and have periodically updated the incoterms to reflect trade developments. The latest revision -Incoterms 2020, which will come into force on 1 January 2020 – are the 9th version of the terms to be approved.
Although there are no legal obligations to use incoterms, they clearly establish the ‘point of delivery’ within a contract, helping avoid any confusion or misunderstanding in regards to both buyer and seller responsibilities and costs associated with worldwide trade.
Some of the key amendments to the latest Incoterms include:
- Ocean Bills have been included (by arrangement) in FCA due to the Banks insistence on them for Letters of Credit
- Incoterms® 2020 aligns different levels of insurance coverage in Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP). - Although the level of insurance has increased to Clause A on CIP, you can continue to use Clause A as long as this has been negotiated with the customer.
- A change in the three-letter name for Delivered at Terminal (DAT) to Delivered at Place Unloaded (DPU) to highlight the Incoterm can be used for all forms of transportation, and extends to delivery away from a port or airport.
- Incoterms® 2020 includes arrangements for carriage with own means of transport in FCA, Delivery at Place (DAP), Delivery at Place Unloaded (DPU), and Delivered Duty Paid (DDP).
- Incoterms® 2020 includes security-related requirements within carriage obligations and costs.
Despite the introduction of the latest version, as Incoterms are not law, after January companies can still continue to use Incoterms 2010 as long as this is stipulated in the contract.
You can download a version of the Incoterms 2020 chart here.