What are the Incoterms rules?
Incoterms rules are a set of guidelines that the International Chamber of Commerce (ICC) releases, since 1936, to facilitate the global trade. They are essential terms of trade for everything with regards to the sale of goods. From order purchases to labelling and packaging, Incoterms provide specific guidance to the import and export trade globally.
Main changes from previous release
The 2010 edition of the Incoterms was already well digested, below you’ll find the main changes applied to the 2020 edition:
- DAT (Delivered at Terminal) has been renamed to DPU (Delivered at Place Unloaded)
- FCA (Free Carrier) has now the ability to release a Bill of Lading (BL) with on-board notation
- CIF: different coverage of transport insurance
- CIP: different coverage of transport insurance
- Customs clearance: in this edition it is more precisely specified which party, seller or buyer, is responsible for carrying out customs formalities and clearance, assuming the costs and risks thereof.
- Security requirements for the transport: in this edition it is more precisely specified where liabilities lie between seller (CPT, CFR, CIP, CIF, DAP, DPU and DDP) and buyer (EXW, FCA, FAS and FOB)
These are not the only changes we have seen in the new edition of the Incoterms in 2020. On top of the changes described above, the ICC has made sure they were also :
- Simplifying language, including less legal content
- Showing deeper breakdown in costs allocation
- Including more detailed explanatory content