INCOTERMS -2020

Incoterms® was first developed in 1936 by the International Chamber of Commerce (ICC) in an attempt to simplify communicational shortfalls involved with international trade. It was through the publication of the first-ever International Rules for the Interpretation of Trade Terms that we now have “Incoterms®.”

The Incoterms® rules were first introduced by ICC in 1936  to establish commonly accepted definitions and rules related to the delivery of goods between trading partners worldwide.icc

As per the ICC Website,

The Incoterms® rules feature abbreviations for terms, like FOB (“Free on Board”), DAP (“Delivered at Place”) EXW (“Ex Works”), CIP (“Carriage and Insurance Paid To”), which all have very precise meanings for the sale of goods around the world.

“Incoterms®” is an acronym standing for international commercial terms. “Incoterms®” is a trademark of International Chamber of Commerce, registered in several countries.

Incoterms® 2020 is being drafted by a Committee of Experts (Drafting Group) that for the first time includes representatives from China and Australia, although most of the members are European. This Committee meets periodically to discuss the different issues that come from the 150 members (mainly Chambers of Commerce) of the International Chamber of Commerce.

ICC last updated the Incoterms® rules in 2019. While Incoterms® 2020 is the most current version of the trade terms, Incoterms® 2010is still in effect today and can be accessed under our resources for business.

Some of the new issues and changes that would be evaluated to be included in the new edition of the Incoterms® 2020 ICC-Incoterms-Timeline-graphic

Incoterms® 2020 provides for demonstrated market need in relation to bills of lading (BL) with an on-board notation and the Free Carrier (FCA) Incoterms® rule.

Incoterms® 2020aligns different levels of insurance coverage in Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP).

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).

There is a change in the three-letter name for Delivered at Terminal (DAT) to DPU.

Incoterms® 2020 includes security-related requirements within carriage obligations and costs.incoterms 2020

In addition to the elimination and creation of some Incoterms®, the Drafting Committee is analyzing other issues to include in the new version of the Incoterms 2020. Among them are:

  • Transportation security.
  • Regulations on transportation insurance.
  • The relationship between the Incoterms® and the International Sale Contract.

 

Hopefully, the version of Incoterms® 2020 that comes into force on January 1, 2020, will serve to facilitate international trade between exporters and importers, adapting to the changes that have occurred in the last decade.

For more information and further clarifications on Incoterms, trade, marketing, and negotiation, you can click on  freight.tips/freight_glossary/

 

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