The world of international trade uses numerous terms and abbreviations that are essential for streamlining transactions and defining the rights and obligations of buyers and sellers. One of the most crucial sets of these terms are the Incoterms, and in this article we dive deeper into the Incoterms 2020, the most recent version.
What are incoterms 2020?
Incoterms, a contraction of "International Commercial Terms", are a set of standard international terms used in international and domestic contracts for the sale of goods. They are intended to provide clarity on tasks, costs and risks involved in the delivery of goods from one party to another.
The evolution of incoterms
The International Chamber of Commerce (ICC) first introduced Incoterms in 1936. Since then, they have been revised several times to meet changing global trade practices. The last revision took place in 2020, hence the term "Incoterms 2020".
Incoterms 2020: The most important changes
Incoterms 2020 has some important updates and changes compared to the previous version, Incoterms 2010. Some of the most important changes are:
- DAT to DPU: The term "Delivered at Terminal" (DAT) has been replaced by "Delivered at Place Unloaded" (DPU). This means that the seller is now responsible for unloading the goods at the agreed destination.
- Insurance under CIF and CIP: New levels of insurance coverage have been introduced in Incoterms 2020 for the Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP) rules.
- Security Requirements: Greater emphasis has been placed on security-related requirements within the transport chain.
The 11 Incoterms 2020
The Incoterms 2020 consists of 11 terms, divided into two categories:
- Rules for each mode of transport: EXW, FCA, CPT, CIP, DPU, DAP, DDP
- Rules for maritime and inland water transport: FAS, FOB, CFR, CIF
Each term represents a clear set of responsibilities between the buyer and the seller. More about this later.
Read more:
The meaning of FCA incoterms 2020
In this blog we delve into the world of FCA incoterms, clarify their meaning and discuss how they impact exporters and importers worldwide.
Why are Incoterms important?
The use of Incoterms ensures uniformity in contracts and reduces the uncertainties that may arise from different interpretations of such terms in different countries. They provide clarity and reduce the risk of legal complications.
Conclusion
Incoterms 2020 remains an essential guide for international sellers and buyers. By clearly defining the rights and obligations of each party, they help to simplify the complexities of international trade transactions. If you are involved in international trade, it is crucial to become familiar with these terms and understand how they can affect your transactions.
Do you need help importing from China, India or Vietnam?
Westwood Sourcing offers specialist support and expertise to make your importing from China, India or Vietnam successful and efficient. Contact us today for more information!
