Incoterms® 2020 Update
It’s that time of the “decade” again – the International Chamber of Commerce (ICC) has finalized its latest revisions to the Incoterms® rulings that will officially be implemented in January 2020.
So, what are the changes? Trans-Border has meticulously gone through every single sentence and page with a magnifying glass to understand the reasoning and thought process as delivered by ICC’s drafting group that is comprised of International lawyers, accountants and trade experts. While the basic order of the Incoterms 2010 remains the same, there are changes to the internal order of each Incoterm rule which in our opinion makes it much more user friendly and should enable a trader to more easily identify the correct Incoterm choice given their specific needs.
Aside from the above, the main points to draw from these updated Incoterm rulings are as follows:
- 11 Incoterms remain – no additional Incoterm has been added
- All Incoterms retain the same modes of transport (7 terms can be used for any mode(s), 4 can be used strictly for sea and inland waterway transport)
- Delivered At Terminal (DAT is in the current 2010 version), has been updated to DPU (Delivered at Place Unloaded)
- Changes to the levels of insurance coverage in CIF and CIP delivery prices
As further explanation to the last point on the changes made to the required levels of insurance under CIP Incoterms, as this does pose increased cost and risk to Exporters selling under the CIP Incoterm: Currently only the minimum level of insurance is required to be provided under both CIF and CIP (Institute Cargo clause ( C ) ) whereas now in Incoterms 2020 the minimum level of insurance required for the CIP incoterm only has been increased to All Risk Insurance (Institute Cargo clause ( A ) ). For those Exporters that are self-insured, we recommend that you consult with your insurance providers to confirm that adequate coverages are included in your Cargo/Marine Policies.
In conclusion, while the changes made in Incoterms 2020 were few, these are important revisions that you should familiarize yourself with so as to ensure you have a complete understanding of the obligations, risks, and costs associated to each Incoterm so as to better enable you to identify the correct Incoterm for your company when negotiating your trade transactions and we strongly urge the trade community to purchase the latest ICC book, Incoterms 2020.
As always, if you have any questions about these revised set of Incoterms, please contact us at 800-493-9444 and we will be glad to assist!