Incoterms® 2020: These are the changes

There remain eleven trade clauses that are decisive for sales contracts. They regulate the transfer of risk or costs. However, you can still refer to the previously published rules, i.e. you can still conclude transactions according to the terms of Incoterms® 2010 after 1.1.2020 - if your business partner agrees. Nevertheless, you should familiarise yourself with the new terms now so that you can continue to use the right clauses for your contracts in the future.

Change in the D clauses

Deletion and a new termThe clause DAT (Delivered At Terminal) has been deleted. The term DAP (Delivered At Place) can be used in its place. Or you can use the new term DPU (Delivered at Place, Unloaded). The narrow term "Terminal" is thus expanded to "Place". In contrast to the clause DAP, where the goods are delivered ready for unloading at the destination, DPU includes unloading.

Insurance coverage under the CIP clause

In the case of the CIP clause, the Insurance coverage changed. Thus, insurance cover ICC-A (Institute Cargo Clauses: All Risk) is now required, while CIF continues to offer only cover ICC-C (minimum insurance cover against explicitly named loss events).

Additional option with FCA

In connection with the shipper's clause FCA (Free Carrier), a new provision on on-board bills of lading (also called "shipped on board bill of lading") has been included. It can be agreed in the purchase contract that the seller receives an on-board bill of lading, which is required, for example, for the processing of letters of credit. This confirms that the goods have been taken over on board an ocean-going vessel or that this is intended. The Incoterms® 2020 specify the procedures, especially as with FCA the handover to the carrier happens beforehand. At the same time, it warns that this process can be prone to errors.

Organise transports yourself on the basis of clauses

It was newly taken into account for the clauses FCA, DAP, DPU and DDP that the transport can also be carried out by the buyer or seller with their own means of transport. Therefore, as an alternative to concluding a contract of carriage, it is also permitted to organise or carry out the transport oneself.

Requirements and obligations with a special focus on sea freight

In the explanations to the Incoterms, clarifications have been included concerning the responsibility of buyer and seller. For example, this concerns the provision of data relating to the safety of the goods or the import and export processing, including approvals.

As a rule of thumb: For all clauses except EXW and DDP, the seller must take care of the export handling, including any necessary permits. The buyer is responsible for import handling, including any necessary permits.

Seven clauses of Incoterms® 2020 apply to all modes of transport: EXW, FCA, CPT, CIP, DAP, DPU and DDP. They can also be used in inland and maritime transport. Furthermore, four clauses are reserved for maritime transport: FAS, FOB, CFR and CIF. These clauses are mainly used for bulk and dry bulk cargoes.

Incoterms® 2010 still valid

You can still refer to the previously published rules. This means that it is still possible to conclude transactions according to the conditions of Incoterms® 2010. Therefore, clearly mark in your contracts which version of Incoterms® you are referring to.

Questions?

If you have any questions, please contact our team.