REVISED INCOTERM DEFINITIONS FOR 2020
IMPORTANT NOTICE
Happy New Year. The International Chamber of Commerce have issued revised INCOTERM definitions for 2020. This is the first revision of the terms since 2010.
The changes are not purely cosmetic and can impact the costs and risks incurred by the contracting parties
Some of the key changes are:
- The commonly used Incoterms FOB & CIF along with FAS and CFR are no longer recommended for containerised cargo (FCL & LCL). These are recommended only for break bulk cargo moving by sea.
- The term CIP (Carriage and Insurance Paid) is now recommended for FCL & LCL (and airfreight) where the seller is responsible for freight and insurance. It should be noted that CIP specifies Insurance as “All Risk” (institute Cargo Clauses (A)) which is a higher level of cover than the previously specified Institute Cargo Clauses (C) which remains the default for CIF.
- The term FCA (Free Carrier) is now recommended for FCL & LCL (and airfreight) where the seller is responsible for delivery to a nominated carrier. It is important when using the FCA term to specify exactly the point of delivery.
- It should be noted that the term EXW (Ex Works) does not require the Seller to load the goods onto the buyers transport. The common practice is for the Seller to load but the risk of damage to the goods remains with the buyer during the loading process. The FCA term can be used as an alternative with the Sellers premises specified as the place the goods will transfer to the carrier.
- A new term has been added DPU (Delivered at Place Unloaded). The term is the same as DAP (Delivered at Place) but it makes the unloading at the place of delivery the responsibility of the seller.
The two key recommendations in respect of the new Incoterms to minimise the risk of any dispute is to:
- Make sure that the revision year is specified when using an Incoterm i.e Incoterms 2020 or Incoterms 2010. As the same term may have different rules depending on the version.
- Make the sure the exact address of handover is specified rather than just a named city to avoid any confusion as to where risk transfers.
Please don’t not hesitate to contact any of the team at Southern Cross Cargo should you require any further information on the new Incoterms rules.
