What are Incoterms?

The Incoterms® rules are the international regulations that apply to the trade for the sales of goods worldwide; these rules are in place to clarify the buyer’s responsibilities and the seller/shipper in the international shipments of global goods. The Incoterms® rules assist the mutual understanding of responsibilities for the sale of goods worldwide between buyers and sellers and the export and import shipping process.

Launched by the International Chamber of Commerce (ICC), the new set of rules entered into force on January 1st, 2020. As of this date, all sales contracts should refer to the Incoterms® 2020 rules as the latest version of the Incoterms® rules.

Why are Incoterms used in international shipping?

They are the authoritative rules for determining how costs and risks are allocated to the parties; they guide individuals and companies participating in the import and export of global trade. These rules are regularly incorporated into contracts and have become part of the daily language of trade between buyers and sellers. 

Key Incoterms 2020 changes – What’s new?

• Provides for demonstrated market need concerning bills of lading (BL) with an on-board notation and the Free Carrier (FCA) rule.
• Aligns different insurance coverage levels in Cost Insurance and Freight (CIF) and Carriage and Insurance Paid to (CIP).
• Includes arrangements for carriage with own means of transport in Free Carrier (FCA), Delivery at Place (DAP), Delivery at Place Unloaded (DPU), and Delivered Duty Paid (DDP).
• There is a change in the three-letter name for Delivered at Terminal (DAT) to Deliver at Place Unloaded (DPU).
• Includes security-related requirements within carriage obligations and costs.