From 1st January 2020, the ICC will implement a revised set of rules, Incoterms® 2020.
The International Chamber of Commerce (ICC) sets out the rules for where the responsibility and liability associated to domestic and international shipping is assigned. These rules are called “Incoterm® Rules” and sometimes referred to as ‘terms of sale’ or ‘terms of trade’. They govern three areas:
1. Transfer of risk
2. Transfer of cost
3. Obligations of seller and buyer
From 1st January 2020, the ICC will implement a revised set of rules, Incoterms® 2020. When booking a shipment that will collect after 1st January 2020, please indicate clearly on your purchase order whether the 2020 rules or a previous version applies.
What’s new in the Incoterms 2020?
The two principal changes in Incoterm® Rules 2020 versus 2010 are the following
Other changes include:
Help to understanding Incoterm® Rules
All Incoterm® rules are associated with a named place or point. According to which Incoterm® rules are used, the named place will correspond either to the “place of delivery” or to the “place of destination”:
Place of delivery – where the risk transfers from buyer to seller, which will not necessarily be the same as the final point of delivery as discussed with your freight forwarder
Place of destination – the final location where the goods will be transported to as discussed with your freight forwarder
How do these two key notions apply to the different Incoterm® rules?
EXW, FCA, FOB, FAS
Example: FOB Rotterdam. Rotterdam, as named place, is the “place of delivery” where the transfer of risk occurs between seller and buyer.
CIP, CPT, CFR and CIF
Example: CPT New York. New York, as named place, will be the “place of destination” to which seller must contract carriage. Place of delivery (“transfer of risk”) will be the place where the seller hands over the goods to the contracted carrier at origin.
DAP, DPU and DDP
Example: DAP Chicago. Chicago, as named place, will be both the “place of delivery” (transfer of risk) and “place of destination” (place to which the seller must contract carriage)
The complete Incoterm® rules 2020 can be obtained from the ICC (www.iccwbo.org)