incoterms 2020

WHAT IS INCOTERMS ?

INCOTERMS 2020 meaning is “International Commercial Terms“, which are a series of predefined terms published regularly by “International Chamber of Commerce (ICC), France“.

ICC published first INCOTERMS in 1936, after its founding in 1919. Since then ICC regularly updates these INCOTERMS and

published its modified version as INCOTERMS 2019,INCOTERMS 2020.

KEY CHANGES IN INCOTERMS 2020

There are major 07 key chaNges in Incoterms 2020, which are as below:-

DAT Incoterm changed to DPU
Insurance points are clarified in CIF and CIP incoterms rules
Costs and cost structures are now clarified
Security in relation to transport is now clearly detailed
Provisions to allow for own transport rather than assuming 3rd party transport
FCA, FOB and Bills of Lading
Presentation and design is much more user friendly

Basically, the substance of Incoterms 2020 has not changed considerably, but the small subtle changes are absolutely crucial for trade specialists.

TYPES OF INCOTERMS 2020 :

As mentioned these INCOTERMS are predefined terms commonly used in Domestic and International trade on commonly accepted its meaning. Mainly there are 11 known terms are as CPT, CIP, CIF, FOB, EXW, FCA,DAP, DPU,DDP, FAS,CFR.

Let us understand these INCOTERMS in detail:-

1.EXW(Ex Works) INCOTERM– In this mode Seller delivers goods to buyer at named place, this named place may or may not be seller’s premise. After that named place buyer’s will be responsible for all other charges like Insurance(negotiable), Loading charges, Clearance charges etc.

2.FCA(Free Carrier) INCOTERM– In this mode Seller delivers goods till Origin Terminal, from here onwards now buyer is responsible for all charges like terminal charges,Insurance(negotiable), loading, carriage, destination charges etc.

3.CPT(Carriage Paid To) INCOTERM–In this mode Seller delivers good till the Destination terminal and pay also terminal charges, after that the buyer will be responsible for delivery to its destination along with other charges like Delivery charges, Insurance(negotiable), Taxes, Import duty and custom clearance.

4.CIP(Carriage and Insurance Paid To) INCOTERM–This mode is similar to CPT but with difference only the Seller is responsible for Insurance risk arrangement till destination terminal. After that the buyer will be responsible for delivery to its destination along with other charges like Delivery charges, Taxes, Import duty and custom clearance.

5.DAP(Delivered at Place) INCOTERM–In this mode Seller delivers good till named Destination and, after that the buyer will be responsible for unloading charges along with other charges like Insurance(negotiable), unloading charges, Taxes, Import duty and custom clearance.

6.DPU(Delivered at Place Unloaded) INCOTERM–This mode is similar to DAP but with difference only the unloading charges also paid by Seller, after that buyer will be responsible for other charges like Insurance(negotiable), Taxes, Import duty and custom clearance.

7.DDP(Delivered Duty Paid) INCOTERM– In this mode Seller will bear all charges till named destination. This impose maximum level of obligation on the seller part. Insurance arrangement is negotiable fo both parties end.

8.FAS(Free Alongside Ship) INCOTERM–In this mode Seller delivers goods till Origin Terminal and also pay origin terminal charges, so from here onwards now buyer is responsible for all charges like Insurance(negotiable), loading, carriage, destination charges etc.

9.FOB(Free On Board) INCOTERM–In this mode Seller delivers goods till Origin Terminal and also arrange Loading at ship, so from here onwards now buyer is responsible for all charges like Insurance(negotiable), loading, carriage, destination charges etc.

10.CFR(Cost and Freight) INCOTERM–In this mode Seller delivers goods till goods Loading at ship and pay loading charges too,so from here onwards now buyer is responsible for all charges like Insurance(negotiable), loading, carriage, destination charges etc.

11.CIF(Cost Insurance and Freight) INCOTERM–This is similar to CFR, but with difference only the Insurance will be arranged by seller till destination port, from here onwards now buyer is responsible for all charges like loading, carriage, destination charges etc.

A pictorial comparison of all above INCOTERMS 2020 are as below:-