2020 Incoterms Update

Incoterms are fundamental to international trade, providing a set of contract terms for international freight delivery. These clearly define the delivery point and the seller and buyers’ responsibilities, risks and costs. Incoterms are reviewed every 10 years and from January 1, 2020 a number of changes will come into effect:

1. DAT (Delivered at Terminal) is now DPU (Delivered at Place, Unloaded).

This is the only Incoterm which makes the seller responsible for unloading the freight at the destination. This change has been to remove the reference to terminal to make the delivery location more generalised. For example, a supplier may deliver and unload goods at the buyer’s factory or warehouse.

2.FCA now has two possible places of delivery- that is, where the risk of loss or damage transfers from seller to the buyer. These locations must be stated when using this Incoterm, in particular.

3. CIP Insurance Changes

For CIP (Carriage and Insurance Paid to), the level of cover required (unless otherwise specified in the agreement) is Institute Cargo Clauses (A), a higher level of cover than specified in Incoterms 2010, where the level of cover is Institute Cargo Clauses (C). For CIF shipments, there has been no change to the level of cover required.

4.The Listing of Costs

All costs are now listed in the ‘Allocation of Costs’ sections for each rule to avoid confusion. Costs were a big issue in the 2010 Incoterms. Carriers often changed their pricing structure to deal with add-ons and sellers were often surprised by being back charged terminal handling charges. The A9 sections in the Incoterms rules guide now gathers the costs, with the principle aim of clearly stating the costs to each party.

If you have any questions, or require any additional information, please contact the friendly team at Stockwells!

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