Incoterms 2020 – Important Changes

A brand new set of revised Incoterms will be introduced from 1 Jan 2020.

What are Incoterms?

Incoterms are a set of international rules set by the International Chamber of Commerce, which relate to the terms of international commercial sales contracts.   They’re an essential consideration for importers and exporters as they determine:

  • Which party is responsible for covering the cost of each part of the international journey
  • Which party is responsible for the shipment at each part of the international journey
  • Which party is responsible for arranging transportation
  • Which party is responsible for ensuring the goods are insured
  • What documentation is required and which party is responsible for this

There are currently 11 different Incoterms, which are divided into four groups, depending on the delivery location and who is responsible for covering the cost of each part of the journey.

As an importer or exporter, you’ll want to choose the Incoterms that best suit you and your shipment, so it’s important to be familiar with them. The current set of Incoterms is as follows:

Below is an indication of the revisions being considered.

DDP may be retired in its current form and split into two different categories as follows:

DTP – Delivered at Terminal Paid:   Seller is responsible for all transport-related costs, including customs duties, when goods are delivered to a terminal at the destination (e.g. to the port, airport or transport centre).

DPP – Delivered at Place Paid: Seller is responsible for all transport-related costs, including customs duties when goods are delivered to somewhere other than a transport terminal (e.g. to an address given by the buyer).

Likewise, FCA may also be split into two different variations – one for land transportation and one for sea.

CNI – Cost and Insurance may be a brand new Incoterm.   CNI terms dictate that, from the departure port, the exporter has responsibility for cargo insurance, while the buyer is responsible for the risk of transportation.

Another change to Incoterms 2020 is the intention to streamline and simplify them, making them easier to understand, reducing the risk of misinterpretation.

Once Incoterms 2020 are confirmed, we shall be sending a comprehensive guide.

Horizon International, with nearly 30 years industry experience are well-placed to advise clients regarding the most appropriate incoterms to reflect their international business activities.   If we can  be of assistance in this area or with any other supply chain or logistics requirements, please contact us