Incoterms 2020 and the Final Changes


Incoterms 2020 and the Final Changes

Finally, the wait for Incoterms 2020 is over. Much has been speculated in recent months about possible changes and we have published here some of these speculations, as

Every 10 years the International Trade Chamber (ICC) updates the terms so that they can continue to reflect the current world trade scene.

Now if the final text has been published, with the following changes:

  1. Bill of lading (BL) issued on board for FCA transactions: under this commercial termination, the place of delivery may take place at the seller/exporter’s own premises or at the other place mentioned in the contract. The FCA termination has been revised to include an optional mechanism whereby the buyer/importer, responsible for contracting the principal cargo, must indicate the carrier issuing the BL aboard the seller after shipping. Immediately after dispatch, the seller will send the bill of lading to the buyer to allow the cargo to be dispatched to its destination.
  2. Different levels of insurance coverage for the CIF and CIP terms: the risk transfer point is the same for both (cargo delivered to the main carrier, contracted by the seller), the minimum coverage required is different for each one. The CIF term remains with the minimum coverage requirement: Clause (C). However, for CIP termination, the need for maximum coverage insurance: Clause (A) will come into force. But the parties are free to negotiate different levels of coverage, as described expressly in the contract, to avoid future disputes.
  3. Transport in own vehicles: it considers that the transport can be done by its own means, and it is not obligatory to contract to third parties to carry out this activity, as FCA, DAP, DPU and DDP.
  4. Transport Safety: inclusion of clear requirements regarding the obligations of the parties with respect to transport safety and the cost involved.
  5. Inclusion of explanatory notes for users: for each term to be described, if an explanatory note for users with details on how to use it is included (including comparisons with other terms), the risk transfer point and how the costs should be assigned.
  6. Reorganization of cost assignment: in this new version, the cost stream was very well detailed between the A9 and B9 banknotes. This update arose from the need to enumerate all the costs involved in the operation of a guide session.
  7. Replacement of DAT by DPU: the exchange is to be made explicitly for delivery to be carried out at any location with no one on the ground at a terminal. It is important to emphasize that the delivery and transfer of the security occurs after the unloading of the goods available to the importer. The customs duties (dispatch) in this case are the responsibility of the importer.

Incoterms 2020 and the Final Changes

Please note that in accordance with the INCOTERMS rules, you are not required to apply the updated terms, whenever you indicate in the documents which version you will use.

Source: Based on a text by Natália F. Bilheri, import/export coordinator and Intradebook. Image: Natália F. Bilheri

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