INCOTERMS® 2020

The Incoterms (International Commercial Terms) are a series of predefined commercial terms that were set by the International Chamber of Commerce (ICC) and are widely used in international commercial transactions. The Incoterms are used mainly to clarify the obligations, the costs and the risks connected with the transfer and delivery of goods. From 1st January 2020 an updated version is in effect, Incoterms® 2020. Nevertheless, the former version Incoterms® 2010 remains in effect for those using them. Check below for further details.

1. EXW – Ex Works (… named place of delivery): This rule is applicable to any mode/s of transport. Buyer is responsible to bear all the costs and risks involved in loading and transportation of the goods from agreed place. The loading place it can be seller’s premises or any other place that they have commonly named. Goods are packed and ready for loading by seller without the obligation to load the goods to buyer’s vehicle. It is up to their agreement.

2. FCA – Free CArrier (… named place of delivery): This rule is applicable to any mode/s of transport. One option, is that the buyer is responsible to bear all costs and risks involved in transportation of the goods from seller’s premises. However, unlike EXW term, seller is responsible for loading the goods properly on buyer’s mean of transport. The other option is for the seller to deliver the goods to agreed named place, without unloading.

3. FAS – Free AlongSide Ship (… named port of loading): This rule is applicable for sea and inland waterway transport. Seller is responsible for export customs clearance of the goods and deliver them alongside the vessel at nominated by the buyer as port of loading. Buyer bears the costs and risks to load the goods on board.

4. FOB – Free On Board (… named port of loading): This rule is applicable for sea and inland waterway transport. Seller arranges to deliver custom cleared the goods on board the vessel at nominated by the buyer as port of loading.

5. CFR – Cost and FReight (… named port of destination): This rule is applicable for sea and inland waterway transport. Seller is responsible for all costs till the goods are delivered to final port of discharge (on board).

6. CIF – Cost Insurance and Freight (… named port of destination): This rule is applicable for sea and inland waterway transport. Seller is responsible for origin handling costs and pays for insurance additionally to freight cost, till the goods are delivered to final port of discharge (on board). All local charges at destination are on buyer’s account. Minimum level of insurance coverage: Institute Cargo Clauses (C), or higher level if commonly agreed.

7. CIP – Carriage and Insurance Paid to (… named place of destination): This rule is applicable to any mode/s of transport. Seller covers all costs and pays for insurance, till the goods are delivered to the first carrier nominated by the seller at the named place of destination. After that, everything is under buyer’s responsibility. Minimum level of insurance coverage: Institute Cargo Clauses (A) or similar clauses.

8. CPT – Carriage Paid To (… named place of destination): This rule is applicable to any mode/s of transport. It is similar with CIP, but without seller’s obligation to pay for insurance. It rests to buyer’s responsibility to insure or not the goods.

9. DAP – Delivered At Place (… named place of destination): This rule is applicable to any mode/s of transport. Seller arranges to deliver the goods at destination agreed place. Buyer bears the costs for import custom formalities and unloading.

10. DPU – Delivered at Place Unloaded (… named place of destination): This rule is applicable to any mode/s of transport. Seller arranges to deliver and unload the goods at destination agreed place. Buyer bears the costs for import custom formalities.

11. DDP – Delivered Duty Paid (… named place of destination): This rule is applicable to any mode/s of transport. Seller arranges to deliver the goods at destination agreed place, custom cleared for import and ready to be unloaded. Seller must pay all local charges from origin till destination. Buyer arranges only to unload the goods.

Sources:

Montezuma, J., (2020), “Incoterms 2020”, available at: https://internationalcommercialterms.guru/#incoterms-2020. Accessed on 09/2020.
International Chamber of Commerce, available at: https://iccwbo.org/. Accessed on 09/2020.