What are major changes in Incoterms 2020?

In simple words, Incoterms are terms for Buyer and seller of goods, which is both are agreed during International transactions. latest Incoterms 2020 is publish on September 2019 and officially come on effects on 1st January 2020 .This terms are accepted by all the governments and legal authorities around the world.

The Incoterms are published by the International chamber of commerce(ICC)  Latest Incoterms 2020 in provide proper guidance for them who do business related to Import and Export on daily basis. 

Below Image provide guide for which Incoterms in where to transfer Risk of Exporter to Importer. 

Overview of latest Incoterms 2020

 EXW 

• In this term seller is only responsible for making the goods available at the seller's premises. The buyer bears the fully risk from there to the destination.

• In this case, seller mostly preferred full payment in advance from buyer

• This term mainly used for express airfreight i.e.: FedEx, DHL.

FCA(Free Carrier)

• In this term Seller is responsible for delivery to the custody of the carrier, which is provided by the buyer.

• Risk is transferred as soon as loading has taken place.

• Standard method of payment for FCA is cash in advance. 

FAS(Free Alongside Ship)

• In this term Seller is responsible for goods placed alongside the vessel nominated by the buyer at the named port of shipment.

• The risk is transferred as soon seller placed the goods at nominated port by buyer.

• Once goods placed at port then full responsibility on buyer.

FOB(Free on Board)

• In this term Seller is responsible for delivery of the goods at nominated by the buyer at the named port. After goods reach at port Seller responsibility is finish.

• As soon as goods are placed in ship risk will be transferred. Buyer bear all the costs from the moment onwards. 

CFR(Cost & Freight)

• In this term Seller is responsible to deliver the goods at buyer named port.

• But risk of loss or damage is transfer when  goods are load to the ship at buyer port.

• The seller is must pay freight to bring the good at named port of destination.

CIF(Cost, Insurance & Freight)

• In this term Seller is responsible for transferred goods at buyer named port and also responsible for the paid of Insurance and freight cost.

• Risk will be transferred as soon as the goods have set down inside the ship from seller port then buyer is bear all the cost.

CPT(Carriage Paid to)

• In this term Seller is responsible for deliver the goods at an agreed place of deliver which is nominated by the seller side and pays for the transport.

• Risk is transferred at the place of transferred at the place of delivery, whereas seller pays for transport to the destination.

CIP(Carriage & Insurance Paid to)

• In this term Seller is same responsible as CPT, but seller is also responsible for the Insurance cover against buyer risk of loss of or damage to the goods.

• Risk is transferred at the place of delivery, whereas seller pays for transport and insurance to the destination.

DAP(Delivered at Place)

• In this term Seller deliver the goods to the disposal of the buyer on the arriving means of transport at agreed place.

• Seller assumes the risk until the goods are made ready for unloading from the arriving means of transport.

DPU(Delivered at Place Unloaded )

• DPU replace the Incoterm DAT(Delivered at Terminal). In this term Seller deliver the goods unloaded at a specified place inside the agreed terminal. 

• Risk is transferred as soon as the goods have been unloaded.

DDP(Delivered Duty Paid)

• In this term Seller is responsible for bringing the goods to the destination, paying any duty and making the good available to the buyer.

• Risk will be transferred as soon as the buyer has access to the goods ready for unloading at the agreed destination.

Difference between Incoterms 2010 and 2020

In Incoterms 2020 have remained the same as 2010, With a few key updates and changes. The main change is DPU term replacing to DAT and other changes as it is.

And also some minor changes provide on ICC Academy