August 12, 2020
The Incoterms® rules are the regulations that apply to the trade for the sales of goods worldwide, these rules are in place to clarify the responsibilities of the buyer and the seller/shipper in the international shipments of global goods. The Incoterms® rules assist the mutual understanding of responsibilities for the sale of goods around the world.
They are the authoritative rules for determining how costs and risks are allocated to the parties, they guide individuals and companies participating in the import and export of global trade. These rules are regularly incorporated into contracts and have become part of the daily language of trade.
Launched by the International Chamber of Commerce (ICC) the new rules will enter into force on January 1st, 2020. As of this date, all sales contracts should refer to the Incoterms® 2020 rules as the latest version of the Incoterms® rules.
'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.' ICC Secretary General John W.H. Denton AO
Incoterms® does not constitute a complete contract, but rather become a part of it. For its application, the following formula should be used:
(The chosen Incoterm® rule) followed by (Named port, place or point) Incoterms® 2020
Example: “CIF Amsterdam Incoterms® 2020” or “DAP 1500 Rankin Road, Houston, TX United States Incoterms® 2020“
If there is no year stated in the Incoterms® then the following applies:
If a different year is stated, e. g. Incoterms® 1980, then respective terms apply.
Don't get confused by Incoterms terminology! Crane Worldwide Logistics created an Incoterms® 2020 PDF chart to help better understand these changes. Reach out if we can provide further support!
Any Mode of Transport
EXW - Ex Works - Seller is only responsible for having the goods packed made available at the seller's premises. The buyer bears the full risk and costs from there to the destination - including the loading of the cargo
FCA - Free Carrier - Seller is only responsible for delivery to the named place. Seller is responsible for the loading. Risk and cost are transferred to the buyer as soon as delivered at named place. Unloading is the buyer's responsibility.
CPT - Carriage Paid To - Seller arranges the transportation and costs to the named destination. Risk is transferred to the buyer once delivered at first carrier.
CIP - Carriage and Insurance Paid to - Seller arranges the transportation, costs and insurance on behalf of the buyer to the named place at destination. Risk is transferred to the buyer once delivered at first carrier. Seller is required to obtain extensive insurance cover complying with insurance Cargo Clauses (A) or similar clause in the buyer's name.
DAP - Delivered at Place - Seller delivers the goods to the agreed place at destination. Seller assumes all cost and risk until the goods are ready for unloading at named place of destination.
DPU - Delivered at Place Unloaded - Seller assumes all costs and risks until the goods are unloaded at the agreed named place of destination. Buyer is responsible for import customs formalities.
DDP - Delivery Duty Paid - Seller delivers goods to the agreed place destination. Seller assumes all cost - including import formalities, and risks until the goods are ready for unloading at named place of destination.
Sea and Inland Waterway Transport
FAS - Free Alongside Ship - Seller is responsible for delivery of goods at the port alongside the vessel. From this point onwards risk and cost transfers to the buyer.
FOB - Free On Board - Seller is responsible for goods loaded on board the vessel. Risk and cost are transferred as soon as the goods have been loaded onboard the vessel.
CFR - Cost and Freight - Seller cover cost of freight to the named port of destination or place. Risk is transferred as soon as the goods have been loaded onboard the vessel.
CIF - Cost, Insurance and Freight - Seller covers cost of insurance and freight to the named port of destination or place. Risk is transferred as soon as the goods have been loaded onboard the vessel. Seller is required to obtain the minimum insurance cover complying with Institute Cargo Clauses (C) in the buyer's name.