| WORLD TRADE DOCUMENTATION: Incoterms 2020
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INCOTERMS 2020 (INCO2020)
ICC (International Chamber of Commerce) effective from January 1, 2020
Incoterms (International Commecial Terms) make international trade easier and
help traders in different countries to understand one another. These standard
trade definitions that are most commonly used in international contracts are
protected by ICC copyright.
To assist traders to understand the areas that the Incoterms cover and
how each one works, the official ICC website now publishes the Preambles
to each term in read-only format, together with basic information and
background. The Preambles do not spell out the obligations of buyer and
seller, which are essential to correct use of Incoterms. This information
may be obtained by consulting the full published texts of the Incoterms,
available from ICC Publishing and ICC national committees throughout the world.
© ICC - «Incoterms» is a trademark of ICC
| EXW (EX WORKS) |
| INCOTERMS 2010 |
INCOTERMS 2020 |
The seller makes the goods available at its premises. This term places the maximum
obligation on the buyer and minimum obligations on the seller. The Ex Works term is
often used when making an initial quotation for the sale of goods without any costs
included.
EXW means that a seller has the goods ready for collection at his premises
(works, factory, warehouse, plant) on the date agreed upon. The buyer pays all
transportation costs and also bears the risks for bringing the goods to their final
destination. The seller doesn't load the goods on collecting vehicles and doesn't
clear them for export. If the seller does load the good, he does so at buyer's risk
and cost.
If parties wish seller to be responsible for the loading of the goods
on departure and to bear the risk and all costs of such loading, this must
be made clear by adding explicit wording to this effect in the contract of sale.
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Ex works is when the seller places the goods at the disposal of the buyer at the seller's
premises or at another named place (i.e., works, factory, warehouse, etc.).
The seller does not need to load the goods on any collecting vehicle. Nor does it need to clear them for export,
where such clearance is applicable.
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| FCA (FREE CARRIER) |
| INCOTERMS 2010 |
INCOTERMS 2020 |
Under this term, the seller delivers the goods cleared for export, on the agreed
date or within the agreed period to the carrier or person nominated by the
buyer at the named place. The chosen place of delivery has an impact on the
obligations of loading and unloading the goods at that place.
If no precise point can be mentioned at the time of the contract of sale,
the parties should refer to the place or range where the carrier or the person
nominated by the buyer should take delivery of the goods.
Carriage is to be arrange by the buyer or by the seller on behalf of the
buyer. When the seller has to furnish a bill of lading, waybill or carrier's
receipt, he duly fulfills this obligation by presenting A "Received
for Shipment" Bill of Lading issued by a person so defined.
This term may be used irrespective of the mode of transport (e.g. Ship,
Air, Rail, etc.), including, “multi-modal” transport as container
or "roll on - roll off" traffic trailers and ferries.
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The seller delivers the goods to the carrier or another person nominated by the buyer
at the seller's premises or another named place.
The parties are well advised to specify as explicitly as possible the point within the
named place of delivery, as the risk passes to the buyer at that point.
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| FAS (FREE ALONGSIDE SHIP) |
| INCOTERMS 2010 |
INCOTERMS 2020 |
Under this term, the seller is required to clear the goods for export. If, however,
parties wish the buyer to arrange for the clearance of the goods, this should
be made clear by adding explicit wording to this effect in the contract of
sale.
Seller’s obligation to deliver is fulfilled when the goods have been
placed alongside the ship, at the named port of shipment. In circumstances
where goods, are sold "down a string", the seller who is in the
middle of the string performs his obligation towards the buyer by procuring
the goods that have been shipped.
The risk of loss of or damage to the goods is transferred from the seller
to the buyer at that moment. The buyer has to bear all costs and risks of
loss or damage to the goods from that point forward.
This term applies to Non containerized shipments and may be used only for
sea, or inland waterway transport.
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The seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge)
nominated by the buyer at the named port of shipment.
The risk of loss of or damage to the goods passes when the products are alongside the ship.
The buyer bears all costs from that moment onwards.
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| FOB (FREE ON BOARD) |
| INCOTERMS 2010 |
INCOTERMS 2020 |
The seller must load the goods on board the vessel nominated by the buyer. Cost
and risk are divided when the goods are actually on board of the vessel.
The seller must clear the goods for export. The term is applicable
for maritime and inland waterway transport only but NOT for multimodal sea
transport in containers.
The buyer must instruct the seller the details of the vessel
and the port where the goods are to be loaded, and there is no reference to,
or provision for, the use of a carrier or forwarder. This term has been greatly misused
over the last three decades ever since Incoterms 1980 explained that FCA should be used
for container shipments.
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The seller delivers the goods on board the vessel nominated by the buyer at the
named port of shipment or procures the goods already so delivered.
The risk of loss of or damage to the goods passes when the products are on board the vessel.
The buyer bears all costs from that moment onwards.
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| CFR (COST AND FREIGHT) |
| INCOTERMS 2010 |
INCOTERMS 2020 |
“Cost and Freight” means that the seller delivers the goods on board
the vessel or procures the goods already so delivered. The risk of loss of or
damage to the goods passes when the goods are on board the vessel. The seller
must contract for any pay the costs and freight necessary to bring the goods
to the named port of destination.
CFR may not be appropriate where goods are handed over to the carrier before
they are on board the vessel, for example goods in containers, which are typically
delivered at a terminal. In such circumstances, the CPT rule should be used.
CFR requires the seller to clear the goods for export, where applicable. However,
the seller has no obligation to clear the goods for import pay any import duty
or carry out any import customs formalities.
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The seller delivers the goods on board the vessel or procures the goods already so delivered.
The risk of loss of or damage to the goods passes when the products are on board the vessel.
The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
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| CIF (COST, INSURANCE AND FREIGHT) |
| INCOTERMS 2010 |
INCOTERMS 2020 |
This rule is to be used only for sea or inland waterway transport.
“Cost, Insurance and Freight” means that the seller delivers
the goods on board the vessel or procures the goods already so delivered.
The risk of loss of or damange to the goods passes when the goods are on
board the vessel. The seller must contract for and pay the costs and freight
necessary to bring the goods to the named port of destination.
The seller also contracts for insurance cover against the buyer’s
risk of loss of or damage to the goods during the carriage. The buyer should
note that under CIF the seller is required to obtain insurance only on minimum
cover. Should the buyer wish to have more insurance protection, it will need
either to agree as much expressly with the seller or to make its own extra
insurance arrangements.
This rule has two critical points, because risk passes and costs are transferred
at different places. While the contract will always specify a destination
port, it might not specify the port of shipment, which is where risk passes
to the buyer. If the shipment port is of particular interest to the buyer,
the parties are well advised to identify it as precisely as possible in the
contract.
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The seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the products are on the ship.
The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
The seller also contracts for insurance cover against the buyer's risk of loss of or damage to the goods during the carriage.
The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.
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| CIP (CARRIAGE AND INSURANCE PAID TO) |
| INCOTERMS 2010 |
INCOTERMS 2020 |
This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.
"Carriage and Insurance Paid to" means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.
The seller also contracts for insurance cover against the buyer's risk of loss of or damage to the goods during the carriage. The buyer should note that under CIP the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.
This rule has two critical points, because risk passes and costs are transferred at different places. The parties are well advised to identify as precisely as possible in the contract both the place of delivery, where the risk passes to the buyer, and the named place of destination to which the seller must contract for carriage. If several carriers are used for the carriage to the agreed destination and the parties do not agree on a specific point of delivery, the default position is that risk passes when the goods have been delivered to the first carrier at a point entirely of the seller's choosing and over which the buyer has no control.
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The seller has the same responsibilities as CPT, but they also contract for insurance cover against the buyer's risk of loss of or damage to the goods during the carriage.
The buyer should note that under CIP the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.
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| CPT (CARRIER PAID TO) |
| INCOTERMS 2010 |
INCOTERMS 2020 |
This rule may be used irrespective of the mode of transport selected and may
also be used where more than one mode of transport is employed.
“Carriage Paid to” means that the seller delivers the goods
to the carrier or another person nominated by the seller at an agreed place
(if any such place is agreed between the parties) and that the seller must
contract for and pay the costs of carriage necessary to bring the goods to
the named place of destination.
This rule has two critical points, because risk passes and costs are transferred
at different places. The parties are well advised to identify as precisely
as possible in the contract both the place of delivery, where the risk passes
to the buyer, and the named place of destination to which the seller must
contract for the carriage. The parties are also well advised to identify as precisely as possible the
point within the agreed place of destination, as the costs to that point
are for the account of the seller.
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The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such site is agreed between parties).
The seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.
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| DPU (DELIVERED AT PLACE UNLOADED) new |
| INCOTERMS 2010 |
INCOTERMS 2020 |
Old Term: DAT (Delivered At Terminal)
Seller delivers when the goods, once unloaded from the arriving means of transport,
are placed at the disposal of the buyer at a named terminal at the named port
or place of destination. "Terminal" includes quay, warehouse, container
yard or road, rail or air terminal. Both parties should agree the terminal and
if possible a point within the terminal at which point the risks will transfer
from the seller to the buyer of the goods. If it is intended that the seller
is to bear all the costs and responsibilities from the terminal to another point,
DAP or DDP may apply.
Seller:
- Is responsible for the costs and risks to bring the goods to the point
specified in the contract
- Should ensure that their forwarding contract mirrors the contract of
sale.
- Seller is responsible for the export clearance procedures.
Importer:
- Is responsible to clear the goods for import, arrange import customs formalities, and pay import duty.
- If the parties intend the seller to bear the risks and costs of taking thegoods from the terminal to another place then the DAP term may apply.
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New Term (replaces old DAT Delivered At Terminal, Incoterms 2010)
DPU replaces the former Incoterm® DAT (Delivered At Terminal). The seller delivers when the goods, once unloaded are placed at the disposal of the buyer at a named place of destination.
The seller bears all risks involved in bringing the goods to, and unloading them at the named place of destination.
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| DAP (DELIVERED AT PLACE) |
| INCOTERMS 2010 |
INCOTERMS 2020 |
New term (Preplaces DAF, DDU and DES). This rule may be used irrespective of the mode of transport selected and may
also be used where more than one mode of transport is employed.
“Delivered at Place” means that the seller delivers when the
goods are placed at the disposal of the buyer on the arriving means of transport
ready for unloading at the named place of destination. The seller bears all
risks involved in bringing the goods to the named place.
The parties are well advised to specify as clearly as possible the point
within the agreed place of destination, as the risks to that point are for
the account of the seller. The seller is advised to procure contracts of
carriage that match this choice precisely.
DAP requires the seller to clear the goods for export, where applicable.
However, the seller has no obligation to clear the goods for import, pay
any import duty or carry out any import customs formalities. If the parties
wish the seller to clear the goods for import, pay any import duty and carry
out any import customs formalities, the DDP term should be used.
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The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination.
The seller bears all risks involved in bringing the goods to the named place.
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| DDP (DELIVERED DUTY PAID) |
| INCOTERMS 2010 |
INCOTERMS 2020 |
This rule may be used irrespective of the mode of transport selected and may
also be used where more than one mode of transport is employed.
“Delivered Duty Paid” means that the seller delivers the goods
when the goods are placed at the disposal of the buyer, cleared for import
on the arriving means of transport ready for unloading at the named place
of destination. The seller bears all the costs and risks involved in bringing
the goods not only for export but also for import, to pay any duty for both
export and import and to carry out all customs formalities
DDP represents the maximum obligation for the seller.
The parties are well advised to specify as clearly as possible the point
within the agreed place of destination, as the costs and risks to that point
are for the account of the seller. The seller is advised to procure contracts
of carriage that match this choice precisely. If the seller incurs costs
under its contract of carriage related to unloading at the place of destination,
the seller is not entitled to recover such costs from the buyer unless otherwise
agreed between the parties.
The parties are well advised not to use DDP if the seller is unable directly
or indirectly to obtain import clearance.
If the parties wish the buyer to bear all risks and costs of import clearance,
the DAP rule should be used.
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The seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination.
The seller bears all the costs and risks involved in bringing the goods to the place of destination. They must clear the products not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.
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