INCOTERMS 2020: What Freight Forwarders Have to Know
Published by the International Chamber of Commerce (ICC), Incoterms are conventional tools for simplifying international exchanges by specifying the transfer points of risks and charges at each stage of the transaction. The first version of incoterms dates back to 1936. It was to standardize the commercial terms used for the transportation of goods by sea. Since 1936, incoterms have constantly been evolving to take into account the new aspects of freight and the evolution of international law. With this in mind, the International Chamber of Commerce (ICC) announced on September 10, 2019, the incoterms update under the name of Incoterms 2020. This update will come into effect on January 1, 2020, and will follow the incoterms 2010.
In concrete terms, there is no significant change compared to the 2010 version. The aim is to make the incoterms 2010 more comprehensible to facilitate the settlement of disputes. The main changes concern the Incoterm DAT (Delivered at Terminal), transport insurance, and transport itself.
The incoterm DAT expands and becomes the DPU (Delivered at Place Unloaded). The destination can be any place and not just a terminal.
Another change in transport insurance, Incoterms 2020 are making a difference in coverage. CIP Incoterm imposes all-risk coverage, whereas CIF requires minimal coverage.
On transport, the 2020 version introduces regulations for transporting with one’s means of transportation. The seller or a buyer can use his means of transport to transport the goods without necessarily calling on a freight forwarding professional.
The 2020 version now includes detailed instructions for choosing the most appropriate Incoterms rule for the transaction. It also provides clear information on the relationship between sales contracts, contracts of carriage, insurance, and financing.
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