Incoterms 2020—What You Need to Know
Incoterms are a set of rules that define the responsibilities of buyers and sellers for the delivery of goods. The rules provide guidance to importers and exporters for global trade practices. Incoterms use abbreviations for shipping terms, for example FOB for “Free on Board”.
Incoterms 2020, which has been worked on for several years by the International Chamber of Commerce (ICC), is now ready to be released. After first being enacted in 1936, this is the 9th version of the international commercial (Inco) trade terms. The terms have evolved to accommodate the latest developments in global trade over the years.
Noting the changing business atmosphere in the global trade market, General Secretary of the ICC, John W.H. Denton stated: “Incoterms® 2020 rules make business work for everyone by facilitating trillions of dollars in global trade annually. Because they help importers and exporters around the world to understand their responsibilities and avoid costly misunderstandings, the rules form the language of international sales transactions, and help build confidence in our valuable global trading system.”
The latest version of Incoterms contains the rules for the use of 11 trade terms with detailed notes and graphics that present the responsibilities of every party under each Incoterm rule. The new version should enable shippers to select the best Incoterm for each transaction.
Incoterms 2020 will include many changes, including the following:
· Aligned levels of insurance coverage for Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP)
· Demonstrated market need in relation to bills of lading (BL) with an on-board notation and the Free Carrier (FCA) Incoterms rule.
· Arrangements for shipments with own means of transport in FCA, Delivery at Place (DAP), Delivery at Place Unloaded (DPU), and Delivered Duty Paid (DDP).
· Additional requirements with concern to security within carriage obligations and costs.
The new Incoterms are set to go into effect on January 1, 2020. With the goal of making the rules more accessible and easier to use, they will be available on the Incoterms 2020 mobile app, which will include a variety of information in the industry as well as training sessions on this latest version.