New Incoterms 1 January 2020

7 October 2019

The International Chamber of Commerce (ICC) published the latest version of Incoterms in September. Since 1934, these international trading rules have established the mutual obligations between buyers and sellers. They are updated every 10 years to include the experiences of users, as well as changes to international policy and new technologies. What are the key changes in Incoterms 2020?

Changes in Incoterms 2020

The Incoterms 2020 are drawn up by a committee of experts with delegations from around the world. Economists, lawyers, freight forwarders and banks are some of the professionals involved the drafting of this document.

In short, the current 11 Incoterms remain intact. However, a number of safety-related requirements have been added to Incoterms 2020 concerning transport obligations and costs. Furthermore, four important changes have been made.

1. DAT to become DPU

The abbreviation Delivered at Terminal (DAT) has been changed to DPU (Delivered at Place Unloaded). There was often confusion about the Incoterm DAT. This meant that it was incorrectly assumed that the goods had to be delivered to a terminal. The name change is intended to eliminate such misunderstandings. Incoterm DPU does not specify type of delivery place.

2. Wider insurance cover possible for CIF and CIP

The Incoterms Cost Insurance and Freight (CIF) and Carriage and Insurance Paid to (CIP) are the only two Incoterms that oblige sellers to take out transport insurance for the benefit of the buyer. This must follow the conditions from the Institute Cargo Clauses (C) of 1 January 2009. However, these conditions only cover a very limited range of risks. Under Incoterms 2020, the options for insurance cover have now been expanded for CIF and CIP.

3. The buyer may also arrange transport at FCA, DAP and DDP

For the Incoterms Free Carrier (FCA), Delivery at Place Unloaded (DAP) and Delivery Duty Paid (DDP), there is an important change relating to transport. Under Incoterms 2020, it will be possible for the buyer to organise their own means of transport. Formerly, the transport was always the responsibility of the seller under Incoterms.

4. B/L may also go to the buyer at FCA

Whereas the bill of lading (B/L) was issued to the buyer under Incoterm Free Carrier (FCA), this has now been changed. Parties may now also agree that the B/L is issued to the seller. The risk that the seller does not get paid if the buyer unexpectedly cancels the transport, has thus been eliminated.

Questions?

Incoterms 2020 will become the new worldwide standard for (inter)national trade as of 1 January. Do you have any questions? Then contact us. We also refer you to our selection guide: Which Incoterm best fits your sea-freight transport?