Main Changes in Incoterms 2020

Main changes in Incoterms
2020
A more practical and simplified
edition of the Incoterms
The 9th version of the Incoterms - Incoterms 2020
has been officially released on September 2019 (the
centenary year of the ICC) and will come into effect
from the 1st of January 2020
“I can say that a general focus will be on

making the rules easier to understand and use,
to try to reduce misuse of the Incoterms rules,
which can lead to costly consequences”
- Emily O’Connor, senior policy manager, ICC
1. Incoterms to disappear
• As it stands, it looks like the committee is likely
to eliminate FAS, DDP, and EXW from Incoterms
2020.
• The DDP Incoterm and the EXW Incoterm are often
considered to be more applicable to domestic trade
and they appear to go against the European Union’s
new customs code.
• As for the FAS Incoterm, the justification seems to
stems from the fact that it’s very seldomly used and
similar to the FCA Incoterm, which allows for goods
delivery at the dock.
2. Incoterms to split
• DDP Incoterm to give way to DTP and DPP
• As mentioned, DDP is likely to disappear due to
inconsistencies with payments of customs expenses.
But instead of eliminating it completely, the
committee is reportedly looking at instead creating
two Incoterms: DTP and DPP.
• Right now, DDP Incoterm stipulates that all customs
duties at destination must be borne by the seller,
regardless of where the goods are being delivered to
(buyer’s address, warehouse, terminal, etc). With the
new changes reportedly being proposed, the seller will
still be responsible for customs duties, but there will
be a clearer distinction with regards to final delivery
location.
• DTP Incoterm (Delivered at Terminal Paid): Seller
will likely be responsible for all transport-related
costs including customs duties when goods are
delivered to a terminal (be it port, airport, transport
center, etc) at destination.
• DPP Incoterm (Delivered at Place Paid): Seller will
likely be responsible for all transport-related costs
including customs duties when goods are delivered
to any other places that’s not a transport terminal.
E.g., buyer’s address.
• Expansion of FCA
• The FCA Incoterm is one of the most versatile
Incoterms. In fact, it’s estimated that four out of ten
international trade operations are carried out under
FCA.
• One of the main advantages FCA offers is its flexibility
with delivery location. This may be the seller’s address,
a warehouse, a seaport, an airport, etc. Plus, it can be
applied to all modes of transportation, which makes it
perfect for multimodal transport.
• But this could soon change and we may see the FCA
Incoterm unfolding into two: one for land
transportation and another for sea.
3. New Incoterms
• CNI: New member of the Incoterm family
• The next Incoterms edition may also welcome a
new family member: CNI or Cost and Insurance.
The CNI Incoterm is meant to fill the gap separating
the FCA Incoterm and the CFR and CIF Incoterms.
• As with all other C Incoterms, CNI will likely be an
‘arrival’ Incoterm, meaning that risks and
responsibilities are transferred from seller to buyer
at the departure port. But this new Incoterm will
probably allow the exporter to bear responsibility
for cargo insurance, while the buyer takes charge of
the risk of transportation.
4. The name changed
In Incoterms 2010 DAT (Delivered at Terminal)
means the goods are delivered once unloaded at
the named terminal. User feedback was that users
wanted an Incoterm that allowed delivery at not
just a terminal. For example, a capital equipment
manufacturer might agree to deliver at the site of a
factory.
Therefore the reference to terminal has been
removed to make it more general. DPU means
Delivered at Place Unloaded.
There is no other change in substance.

5. Change of insurance in CIP/CIF
In ICC Incoterms® 2020 CIF keeps the same
insurance requirements (i.e. ICC(C) )
CIP has increased the insurance required to Clause
A (Institute of Cargo Clauses (A))
6. Seller/buyer using own transport
Incoterms 2010 assumed that the transport of the
goods between seller and buyer would be carried
out by a third party carrier. They did not deal with
where the transport is provided by the seller or
buyer (e.g. the seller's own truck).
ICC Incoterms® 2020 now clarifies the position.
For example, the buyer in FCA Incoterms 2020 is
required to "contract or arrange at its own cost for
the carriage of the goods from the named place of
delivery".

Main Changes in Incoterms 2020

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Main Changes in Incoterms 2020

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Main changes in Incoterms

“I can say that a general focus will be on

There is no other change in substance.

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