Incoterms® 2020 - Outlook | DB Group

Incoterms® 2020 - Outlook

17 October 2019


We inform you that tomorrow the ICC (International Chamber of Commerce) will launch Incoterms® 2020, the latest edition of the trade terms for the delivery of goods.

The official presentation will be held in Rome, and the new Incoterms® will be effective from January 1, 2020.

According to the ICC official website, these will be the main changes:

-    After numerous market demands regarding the bill of lading (BL), Incoterms® 2020 will include an on-board notation in the Free Carrier (FCA) Incoterms® rule

The FOB Incoterms® rule, frequently adopted for container shipments, implies relevant risks for the seller. As a matter of fact, under FOB rule sellers are no longer in charge of the container when it arrives at the port, but they are still accountable for any inconvenience until the goods are loaded onto the ship.
For this reason, sellers prominently selected the FCA Incoterms® rule. However, they also wanted to address their payments with a letter of credit. To be issued, letters of credit need an onboard BL, something that is difficult to obtain under FCA rule.

Thus, the ICC Incoterms® 2020 FCA rule now enables the parties to agree for the buyer to ask the carrier to issue an onboard bill of lading to the seller.

-    Incoterms® 2020 will impose different levels of insurance coverage in Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP)

Under Incoterms® 2010, the seller had to provide a Clause C level of insurance for both Incoterms® rules. This is the most elementary level, and even though can be fitting for bulk commodity cargoes, it is not the same with manufactured goods.

For this reason, In ICC Incoterms® 2020 CIF keeps the same insurance requirements (i.e. Clause C) but CIP has increased the insurance level required to Clause A.

-    Incoterms® 2020 will include arrangements for carriage with own means of transportation in FCA, Delivered at Place (DAP), Delivered at Place Unloaded (DPU), and Delivered Duty Paid (DDP)

Under Incoterms® 2010, the shipment of the goods was always intended to be carried out by a third-party: they did not presuppose that the transportation could be provided by the seller or buyer with their own means. Incoterms® 2020 now include the possibility to organize carriages with their own means.

-    There is a change in the Delivered at Terminal rule: it will be now known as Delivered At Place Unloaded (DPU)

In Incoterms® 2010, the DAT (Delivered at Terminal) rule meant that the goods were delivered once unloaded at a terminal. Many expressed the idea to get an Incoterms® rule that allowed delivery at not just a terminal. Therefore, the DAT Incoterms® rule will be now known as DPU (Delivered At Place Unloaded), so that it does not refer to just “terminals”.

-    Incoterms® 2020 will include security-related requirements within carriage obligations and costs

Transport security requirements are now essential, but they imply costs and possible delays – when not fulfilled. Incoterms® 2010 did discuss the responsibility for security controls and their costs. In Incoterms® 2020, security obligations are even more central.

If you need any information, don’t hesitate to contact us!

We shall keep you posted about any further development.

D.B. Group


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