New Incoterms in town
First things first: The new Incoterms® 2020 will enter into force on 1 January 2020.
Incoterms® 2020 is the 9th version of the Incoterms® rules. Following its introduction in 1936, the international commercial (Inco) trade terms have been revised in 1953, 1967, 1976, 1980, 1990, 2000 and 2010. Every time in order to support changes in international trade practices.
The timing for Incoterms® 2020 is well chosen by the International Chamber of Commerce (ICC) in that 2019 is the 100th birthday if the ICC.
Although in force 1 January 2020 the rules were launched and published this week.
Before this, the revision process has been interesting to follow (in this case; from the “outside”):
The revision started end 2016. The first Drafting Group meeting was held October 2016. Since then we have witnessed crazy postings on the social media basically guessing on the coming changes; most of which have been proved wrong. Following that, it seemed like the ICC “isolated” the process and even asked Drafting group members – and other relevant parties to sign a “Non-Disclosure Agreement”; this making it practically impossible to obtain any kind of information about what issues are being discussed. Last but not least, the ICC initiated a marketing campaign unlike anything I have ever seen from that side. Lots of activity on the social media – and even podcasts. None of which (as far as I was able to find) revealed anything about the actual issues being discussed – and the changes in the pipeline ….
However, now the Incoterms® 2020 is here, and below is a quick high-level overview of the changes in Incoterms® 2020 compared to Incoterms® 2010.
There are two key changes to Incoterms® 2020 compared to the 2010 edition:
1: There is now wording in FCA (Free Carrier) that allows for Bills of Lading to be issued after loading. The purpose of this is to solve the challenge of using FOB for containerized transport.
(The issue is described here.)
2: DAT (Delivered at Terminal) is renamed Delivered at Place Unloaded (DPU)
In addition, there are other changes – for example:
* CIF and CIP (Cost, Insurance and Freight and Carriage and Insurance Paid to) now describe new standard insurance arrangements; I.e. it differentiates between the types of goods. Of course, the level of insurance coverage is (still) subject to the agreement between buyer and seller.
* Where listed, cost allocation between buyer and seller is stated more precisely
* FCA (Free Carrier), DAP (Delivered at Place), DPU (Delivered at Place Unloaded) and DDP (Delivered Duty Paid) now take account of buyer and seller arranging their own transport rather than using a third party.
* “Explanatory Notes for Users” for each Incoterm® have replaced the 2010 edition’s Guidance Notes and are designed to be easier for users.
The above is based on various (as trustworthy as possible) sources. More information to follow once more information and analysis emerge. Hopefully we will all be ready 1 January 2020.
And while preparing please take care of each other and the LC.
Kind regards
Kim