case study incoterms 2020

The ins and outs of Incoterms®

Incoterms ® are an integral part of 90 percent of international sales contracts. They regulate transport costs and clarify the assumption of risk to which goods are exposed. A new version of the Incoterms ® has been in force since 2020. Read here which Incoterms ® are valid in 2021 and how to avoid the pitfalls.

What are incoterms ® .

Incoterms®, or International Commercial Terms, are published by the International Chamber of Commerce ( ICC ). They define international commercial standards, including the cross-border delivery of goods from seller to buyer. In practice, they take the form of standardized terms and conditions included in sales contracts. Their use is recommended by the ICC. The current Incoterms® version dates from 2020. Each Incoterm® regulates the obligations of the seller (A1-A10) and buyer (B1-B10).

• A2/B2 Delivery/acceptance
• A3/B3 Transfer of risk
• A4/B4 Transport
• A5/B5 Insurance
• A6/B6 Delivery/transport document
• A7/B7 Export/import clearance
• A8/B8 Testing/Packaging/Marking
• A9/B9 Allocation of costs
• A10/B10 Notifications

Every term has its pros and cons. It often depends on whether you are looking at them as a seller or a buyer. Wilfried Müller, ICC-certified trainer for Incoterms ® 2010 and 2020, Managing Director of LOCON Consult GmbH & Co. KG (Image: LOCON-Consult GmbH & Co. KG)

What don’t Incoterms ® cover?

Incoterms ® only constitute a small part of a sales contract and are no substitute for one. They do not cover contractual aspects such as transfer of ownership, transport or insurance. Here is a list of the contractual elements not covered by Incoterms ® :

• Transfer of ownership or retention of title
• Breaches of contract
• Time, place and method of payment
• Regulations in case of force majeure
• Responsibilities for insurance of the transported goods, unless the clauses CIP or CIF are agreed upon

Why are Incoterms ® important?

Incoterms ® establish a standard set of rules governing the relationship between the seller and the buyer on specific points. That is why they are important. Incoterms ® regulate transport costs and the risk to goods during domestic and cross-border shipment. Since these rules benefit both contractual parties, Incoterms ® form an integral part of 90 percent of all international sales contracts.

Do Incoterms ® have to be included in a sales contract?

Incoterms ® do not constitute a legal requirement, rather they represent agreements made in accordance with private contract law. For this reason, including recommended terms in sales contracts is not mandatory. “Many sellers and buyers do not understand the implications of waiving Incoterms ® ,” says Wilfried Müller, an ICC-certified trainer for Incoterms ® 2010 and 2020 and managing director of the consulting firm LOCON Consult GmbH & Co. KG. But Incoterms ® do not regulate every last detail. “Each clause has its pros and cons,” Müller explains. “ That’s why know-how and experience are required when incorporating them into contracts.”

Where Incoterms ® are waived, statutory regulations apply 

Where Incoterms ® do not form part of a contract, statutory regulations apply:

• Where shipments within Germany are concerned, the German Civil Code (BGB) and the German Commercial Code (HGB) apply.
• Where international shipments are concerned, EU law or the United Nations Convention on Contracts for the International Sale of Goods (CISG) may apply.

Not everyone is aware of German and international law as far as transport costs and risk to goods are concerned. Citing transfer of risk as an example, Incoterm’s specialist Wilfried Müller says, according to the CISG, the risk passes to the buyer as soon as the goods are collected by the carrier. “But few buyers will find that acceptable,” he says.

The eleven rules

The eleven Incoterms ® rules specify different contractual conditions but are often similar in structure. Among other things, they define rules for the transfer of costs and risks from the seller to the buyer and the place of delivery.

Case study 1: Ex Works at a glance

Ex Works is a very common term in road transport and relates to the collection of goods. This rule places minimum responsibility on the seller, who simply makes the goods available for collection at a predefined location. The seller is freed of any liabilities pertaining to the delivery of the goods and, consequently, has nothing to do with the loading and shipping to the buyer. The consequences for the buyer are as follows:

• The seller shall inform the buyer about the time, place, and quantity of collection.
• The goods are provided to the buyer at the place of collection. The buyer is solely responsible for loading the goods, as well as the cost involved, the labor, and the means of transport. In accordance with Incoterms ® , the buyer must also prepare the export paperwork.
• Until they are handed over at the place of collection, the goods are the sole responsibility of the seller. From the moment the goods are handed over, transport risk (damage, loss, theft) is transferred to the buyer. Securing the cargo is regulated by law and cannot be overridden by Incoterms ® . Thus, the seller is also liable.
• But, says Wilfried Müller, the Ex Works term is customer-friendlier in practice. For example, in the case of shipments to a non-EU country, export documentation must also be prepared for Ex Works, as with any other Incoterm ® . According to Incoterms ® , the seller shall help to obtain export documentation, but does not have to provide the documentation. Although, typically, a seller will still manage the documentation. “But this also means that Ex Works is no longer Ex Works, but FCA,” says Wilfried Müller.

Tip: Use the FCA term instead of ex works for loading and export documentation! With FCA, loading and export documentation are the responsibility of the seller.

Case study 2: the DDP term

For the buyer, the benefit of Delivered Duty Paid is that the seller bears all the shipping costs and risks to the buyer. Unloading the goods from the means of transport, provides the only exception to this rule. However, caution is advised. Regulatory requirements in some countries may counteract or override this Incoterm ® . Duties in some countries, for example, must be paid directly by the importer. “It can be expensive and lead to some unpleasant customs and tax-related consequences if specific contractual agreements cannot be legally fulfilled, even if they are prescribed by Incoterms®,” notes Müller.

Tip: DAP is a good solution for sellers when it comes to duties and taxes etc., since under this term they are not responsible for them. Or there is CPT, whereby the seller pays the freight to the destination, but the risk is passed to the buyer at the time of loading. Whether this term is appropriate, however, can depend on the seller’s outlook and the countries in which the buyer and seller are based.

Case study 3: insurance

Most customers, says Mueller, assume that shipments are insured. “But an insurance requirement only exists if the terms CIP or, in the case of marine transport, CIF are included in the contract.” The Incoterms ® specialist, therefore, strongly recommends talking openly with the customer. If not insured, damage caused in transit can become a business risk.

Make sure international agreements are well put together

Which Incoterms ® are the right ones for your business and your contract? To incorporate Incoterms ® into contracts, the ICC and ICC-certified specialists offer training. Here are some helpful ICC tips for contracts:

• Name the contractual parties and the object of the contract (services and payment). Formulate all the constituent parts of a contract in such a way that third parties can also understand them. Put in writing what has been agreed orally.
• Are the seller and buyer from member states of the Vienna Convention? If so, the UN Convention on Contracts for the International Sale of Goods ( CISG ) applies. Unless you have agreed otherwise.
• Use globally recognized specimen contracts. Specimen contracts can be downloaded from the ICC. Get legal advice is you choose to adapt a contract.
• Use the globally recognized Incoterms ® .
• Insure yourself against unforeseeable events. These include force majeure or a pandemic.
• Make sure the money side of things is secure. The globally recognized ICC banking rules are a good place to start.
• Check the creditworthiness of companies or unknown business partners. This will help you avoid becoming a victim of fraud.

Remain clear and negotiate where there is a dispute

Not all business deals run smoothly. So, what do you do if a dispute arises? Ulrich Helm, a partner in the Frankfurt office of the law firm Mayer Brown , offers the following tips for reaching an agreement:

• Think about your walk-away point carefully: Walk-aways are the extreme positions of both parties, so the solution may lie somewhere in the middle. Do not state your own demand too hastily since this will allow the other party to determine your midway position.
• Think ahead about your goal. You need to identify the cornerstones of a settlement internally. This will help you determine when to break off negotiations.
• Assess opportunities and risks properly, including cost estimates.
• Select expert lawyers. If the dispute is about plant engineering, for example, get a lawyer who understands engineering jargon.
• Prepare your negotiating tactics. This includes naming team members and messages.
• Create clarity and structure. Do not present the dispute chronologically since this encourages a counter-narrative. It is better to structure the dispute around the contract.
• Pressure creates resistance and threats usually undermine objective negotiations.

Resolve disputes through arbitration

Many buyers and sellers stipulate ICC arbitration in the contract should a dispute arise. For this purpose, the ICC offers a clause that can be adapted to the specific contractual situation. The ICC lists the following benefits of arbitration:

• In the event of a dispute, no one must submit to the judicial system of another country whose language they do not speak and whose rules they do not understand.
• The parties to the dispute can select arbitrators based on their expertise.
• Arbitral awards can be enforced in accordance with the UN Convention. This applies to judgments made by state courts to a limited extent only.
• The ICC's International Court of Arbitration has a worldwide reach and assistance is provided in the company’s preferred language.
• On average, ICC arbitration proceedings take approximately two years.

Currently, some $130 million is in dispute. The costs of proceedings depend on the amount being disputed and the number of arbitrators involved. The ICC's cost calculator provides and overview of the procedural costs. However, additional costs are incurred by lawyers, among other things. The ICC Court of Arbitration offers a less expensive procedure called the “accelerated arbitration procedure” for amounts up to $3 million.

The origins of Incoterms ® Entrepreneurs, merchants and financiers founded the International Chamber of Commerce ( ICC ) in 1919, a year after the end of the First World War. The founding idea of the “merchants of peace,” as they called themselves, was economic growth and prosperity. It was believed that nations that traded more with each other would engage in fewer wars. The ICC’s goals were the liberalization of international trade and the establishment of uniform legal and technical standards. The German National Committee of the ICC was founded in 1925. Since 1923, studies have compared standard terms in different countries. The first version of the Incoterms ® rules was published in 1936.

How often are Incoterms ® updated?

Incoterms ® are issued by the International Chamber of Commerce (ICC) . There are no fixed intervals for updating. However, since 1980 they have been updated every ten years.

• Incoterms ® 2020 take into account changes in trade practices, innovations in financing and insurance coverage, and increased safety requirements.
• An editorial team comprising lawyers, entrepreneurs, and company representatives from around the world worked on the current version for approximately two years.  
• According to the ICC, 90 percent of all international sales contracts contain Incoterms ® clauses. A total of 120 countries uses them.

Incoterms ® and post-Brexit

Trade with the UK: Customs and Incoterms ® expertise is in high demand

Download our white paper on the current Incoterms ®

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Incoterms® 2020 Explained – The Complete Guide

Incoterms® 2020 Explained, how they will affect global trade.

The  International Chamber of Commerce  have published new Incoterms® 2020 that have come into effect from the 1st of January 2020.  The ICC originally published Incoterms® in 1936 and have continually made updates to reflect the changes to the Global Trade environment.  It’s important that all parties involved in trade clearly understand the changes and how they apply to global supply chains.

Incoterms® play such a vital role in the world of global trade.  Incoterms® 2010 or Incoterms® 2020 may seem complicated, but it’s imperative that buyers and sellers clearly understand how they work and their own obligations along the supply chain.  In this article we explain the updates made and provide simple explanations, along with an Incoterms® infographic to explain Incoterms® 2020.

Note: The content of this article and chart is only for general information purposes and shall not in any circumstances be considered bespoke legal advice or professional advice.

What are Incoterms®?

Put simply, Incoterms® are the selling terms that the buyer and seller of goods both agree to during international transactions.  These rules are accepted by governments and legal authorities around the world. Understanding Incoterms® is a vital part of International Trade because they clearly state which tasks, costs and risks are associated with the buyer and the seller.

The Incoterm® states when the seller’s costs and risks are transferred onto the buyer.  It’s also important to understand that not all rules apply in all cases.  Some encompass any mode or modes of transport.  Transport by all modes of transport (road, rail, air and sea) covers FCA, CPT, CIP, DAP, DPU (replaces DAT) and DDP.  Sea/Inland waterway transport (Sea) covers FAS, FOB, CFR and CIF, which we explain below.

Why are Incoterms® vital in International Trade?

Incoterms® are referred to as  In ternational  Co mmercial  Terms .  They are a set of rules published by the  International Chamber of Commerce (ICC) , which relate to International Commercial Law.  According to the ICC,  Incoterms® rules  provide internationally accepted definitions and rules of interpretation for most common commercial terms used in contracts for the sale of goods’.

All International purchases will be processed on an agreed Incoterm to define which party legally incurs costs and risks.  Incoterms® will be clearly stated on  relevant shipping documents.

An overview of Incoterms® 2020 for 11 Terms, 7 for any mode of transport.

Exw  – ex-works  or ex-warehouse.

• Ex works is when the seller places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.).
• The seller does not need to load the goods on any collecting vehicle. Nor does it need to clear them for export, where such clearance is applicable.

FCA – Free Carrier

• The seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.
• The parties are well advised to specify as explicitly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.

FAS – Free Alongside Ship

• The seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment.
• The risk of loss of or damage to the goods passes when the products are alongside the ship.  The buyer bears all costs from that moment onwards.

FOB  – Free On Board

• The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered.
• The risk of loss of or damage to the goods passes when the products are on board the vessel.  The buyer bears all costs from that moment onwards.

CFR  – Cost and Freight

• The seller delivers the goods on board the vessel or procures the goods already so delivered.
• The risk of loss of or damage to the goods passes when the products are on board the vessel.
• The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

CIF – Cost, Insurance and Freight

• The seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the products are on the ship.
• The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.
• The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

CPT  – Carriage Paid To

• The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such site is agreed between parties).
• The seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

CIP – Carriage And Insurance Paid To

• The seller has the same responsibilities as CPT, but they also contract for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.
• The buyer should note that under CIP the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

DAP – Delivered At Place

• The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination.
• The seller bears all risks involved in bringing the goods to the named place.

DPU – Delivered At Place Unloaded (replaces Incoterm® 2010 DAT)

• DPU replaces the former Incoterm® DAT (Delivered At Terminal).  The seller delivers when the goods, once unloaded are placed at the disposal of the buyer at a named place of destination.
• The seller bears all risks involved in bringing the goods to, and unloading them at the named place of destination.

DDP – Delivered Duty Paid

• The seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination.
• The seller bears all the costs and risks involved in bringing the goods to the place of destination.  They must clear the products not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.

Download an easy to understand chart of all Incoterms® 2020

This infographic states each Incoterm® and explains obligations and charges that are accepted by the buyer and seller.

What are the differences between Incoterms® 2010 and Incoterms® 2020?

The main explanations of Incoterms® 2020 have remained the same, with a few key updates and changes.  The main change includes a new DPU term replacing DAT, along with other changes to Incoterms® as below.  It’s imperative that all parties involved in global trade understand these updates and how they may affect your supply chain.

New Incoterm® DPU Replaces DAT

The previous Incoterm® DAT (Delivered at Terminal) is now called DPU (Delivered at Place Unloaded.  It was decided to change the term to DPU to remove confusion that arose in the past. In the past, DAT required ‘Delivery at Terminal (unloaded)’, however the word “terminal” caused confusion.  The new term DPU (Delivery at Place Unloaded) covers ‘any place, whether covered or not’.

Different level of insurance cover between CIF and CIP

CIF and CIP are the only two Incoterms® that require the seller to purchase insurance in the buyer’s name.  Under Incoterms® 2010 the insurance cover for both CIF and CIP was required under Institute Cargo Clause C. Under the new Incoterms® 2020, CIP requires insurance cover complying with Institute Cargo Clause A.  Clause A covers a more comprehensive level of insurance which is usually suitable for manufactured goods, where Clause C would likely apply to commodities.

In summary:

• CIF remains the same, it requires  ‘Institute Cargo Clause C’  insurance cover – Number of listed risks, subject to itemized exclusions.
• CIP now requires an upgraded  ‘Institute Cargo Clause A’  insurance cover – All risk, subject to itemized exclusions.

Updated Costs and Listings

Costs became quite a problem with Incoterms® 2010 with some parties.  In some cases carriers were changing their pricing so sellers were often faced with new back charged terminal handling charges.  Incoterms® 2020 now provides much more detail around costs and now appear under the A9/B9 sections of the rule. This clearly states which costs are allocated to each party.

Increased Security Requirements, Allocations and Costs

In a world with increasing security requirements, the Incoterms® 2020 rules now provide more detail around security allocations and necessary costs.  For each Incoterm® rule, the security allocations have been added to A4/A7 and the associated costs have been added to A9/B9.

Buyer’s and Seller’s Own Transport

Under Incoterms® 2010 it was assumed that all transport would be undertaken by a third party transport provider.  Updates to Incoterms® 2020 allows for the provision for the buyer or seller’s own means of transport. This recognizes that some buyers and sellers are using their own methods of transport, including trucks or planes to get goods delivered.

• This allows for the buyer’s own means of transport under the FCA rule
• This allows for the seller’s own means of transport under DAP, DPU and DDP.

FCA, FOB and the Bill of Lading Process

Updates were made to the previous Incoterms® 2010 to encourage exporters of containerized goods to use the FCA Incoterm®.  In reality most parties were still using FOB when they should have been using FCA. This is because even experienced sellers still wanted to use FOB because they wanted the contract to be under a Letter of Credit.

Therefore provisions have been made to the Incoterms® 2020 to state that the buyer must instruct the carrier to issue a transport document stating that the goods have been loaded – i.e a Bill of Lading with an ‘on board’ notation.  In the past carriers have frequently refused to issue a Bill of Lading with a notation to the seller if they have received the goods from an intermediary transport (such as a truck), instead of directly from the seller.

How to put Incoterms® 2020 into Practice on Sales Contracts

The new Incoterms® 2020 have come into effect on the ‘effective’ date of the 1st January 2020.  What does that actually mean for your business? Trading partners can still carry on using Incoterms® 2010 if they prefer to, which may occur when it is being used to confirm complex commercial agreements.

All parties must make it clear in contracts which Incoterms® version is being referred to in order to avoid any misunderstanding.  Different trading partners will incorporate Incoterms® into contracts at different times.

It is imperative that you check existing contracts to ensure that the Incoterms® edition year is included.  If there is no year stated then the following will apply:

• Up to 31st December 2019 – Incoterms® 2010
• From 1st January 2020 – Incoterms® 2020
• If a different year is stated, for example Incoterms® 1990, then the respective terms will apply

The below is the structure that should be used on Sales Contracts:

[Incoterm® rule] [Named port/place/point] Incoterms® 2020

CIF Longbeach Incoterms® 2020

DPU 4300 Longbeach Blvd, Longbeach, United States Incoterms® 2020

How to Prepare your Business for Incoterms® 2020

As Incoterms® are updated you should always take the time to assess how any changes may impact your business.  It’s much better to be proactive rather than reactive should some big issues arise with any of your orders or shipments.  Always refer to professional legal advice before making any changes to your business.  To prepare for the changes, here are a few things that you may consider: 

• Identify the Incoterms® that your business typically uses
• Audit any contracts that are extended into 2020 or that renew in 2020
• If you are buying or selling under a Letter of Credit, you may consider the option to use FCA instead of FOB (refer notes above).  This will involve instructing carriers to issue Bills of Lading.  Always refer to professional legal advice before making any change.
• Ensure that you make changes to any contracts and documents as necessary
• Ensure that you are stating the Incoterms® edition year that both parties are referring to in sales contracts
• Look further into the updated costs and listings to see if it has any impact on your landed cost calculations
• Increase the level of insurance cover to satisfy the new CIP requirements
• Structure tighter security for imports and exports
• Understand who has the responsibility for loading and unloading charges
• Know where the risk of loss is transferred
• Contract professional legal advice from experienced supply chain and legal analysts to audit current procedures
• Buy a copy of the official  Incoterms® 2020 book from the ICC here

Can Incoterms® be used in the United Kingdom?

Because the United Kingdom’s position, trade is regulated by the  ‘Uniform Laws of the Sale of Goods Act 1979’  and case laws.  However, the terms of trade can be agreed by both parties before the trade is to take place. Throughout sales contracts the buyer and seller can follow either the ICC guidelines of the Sales of Goods Act 1979’s enactments.

Get a copy of the official ICC Incoterms® 2020 book

You can purchase the official Incoterms® 2020 book from the  International Chamber of Commerce here .

Ben Thompson

Ben is passionate about International Trade, Import/Export, International Shipping and connecting world markets. For the last 14 years Ben has specialized in importing and exporting goods around the world, and creating software solutions to streamline the import/export process.

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Learn Incoterms® 2020 – Includes Case Studies

• Post published: 28 December, 2022
• Post category: StudyBullet-11
• Reading time: 9 mins read

What you will learn

Learn what the Incoterms ® 2020 are and what they are used for.

Learn how different teams in a company directly and indirectly interact with incoterms ® 2020, understand why incoterms is important for tax & finance, learn how to choose the right incoterm for your business needs, important of aligning incoterms on customs documentation, understand the challenges with cost allocation in incoterms and how to overcome them, understand how to start a discussion about incoterms with suppliers and customers, explore case studies that illustrate the importance of applying incoterms correctly.

Description

This course will introduce the Incoterms® 2020 and take you on a learning journey that goes well beyond the fundamentals. In addition to the basics of the Incoterms, we will explore how the terms should be correctly applied and why they can affect almost the entire organization and not just a handful of teams or individuals.

We will learn through crisp and concise lectures that include useful anecdotes, mini-quizzes and short case studies.

After you complete this course, you will be able to engage with various stakeholders both within the organization and outside the organization on topics such as:

• How the Incoterms should be used
• What the Incoterms do
• What the Incoterms do NOT do
• Roles, responsibilities, and liabilities between buyers & sellers
• Allocation of costs between buyers & sellers
• Transfer of risk for any shipment from the buyer to seller
• Customs value and its relevance to the Incoterms
• The suitability of specific Incoterms for specific modes of transport
• Many other concepts that make your understanding of the Incoterms holistic

The course is designed to give you the edge you need to apply the Incoterms in real life!

Topics will be broken up into bite-sized chunks that have been made easy to understand. You are free to complete the course at whatever pace is comfortable for you.

With the understanding that you will gain in this course, you will be able to confidently navigate the various sources of information online and answers to any specific question you may have about Incoterms in the future.

The course is delivered primarily through presentation decks with abundant diagrams used to visually represent ideas and concepts, in order to keep things interesting for the learner.

Welcome & Course Introduction to Learn Incoterms 2020

The basics of incoterms, the 11 incoterms, case studies, closing notes & conclusion, 💠 follow this video to get free courses on every udemy topics 💠.

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Incoterms ® 2020 Takes Effect: Your Questions Answered

The Weekly Roar

Incoterms ® 2020 takes effect: your questions answered.

Incoterms ® 2020 went into effect on January 1, 2020. Here are answers to many common questions, including what changes have been made in the newest version of Incoterms ® .

What are Incoterms ® ?

Incoterms ® are 11 predefined rules, or terms, published by the International Chamber of Commerce (ICC) to reduce uncertainties and ambiguities in contracts for international trade. Use of an Incoterm ® three-digit code in a contract removes the need to write out the full text of that rule.

As described on the ICC website , “The Incoterms ® rules are the world’s essential terms of trade for the sale of goods. Whether you are filing a purchase order, packaging and labelling a shipment for freight transport, or preparing a certificate of origin at a port, the Incoterms ® rules are there to guide you. The Incoterms ® rules provide specific guidance to individuals participating in the import and export of global trade on a daily basis.”

What Do Incoterms ® Cover?

In a sales contract, Incoterms ® delineate the primary obligations and responsibilities of the buyer and the seller, including:

• When delivery takes place
• When risk is transferred from seller to buyer
• Export and import clearance and insurance
• How any other costs that pertain to the delivery of the goods are divided

What Do Incoterms ® Not Cover?

A complete contract cannot be written with the use of Incoterms ® alone. Important elements of a contract that Incoterms ® do not cover include:

• Price of the goods
• Title transfer
• Payment obligations and terms in detail
• Vessel requirements
• Unforeseeable circumstances that prevent either party from completing the contract (force majeure)
• Termination
• Trade restrictions
• Compliance issues
• Jurisdiction-specific laws and regulations

How Are Incoterms ® Created?

Incoterms ® have been a project of the ICC since 1936. For each revision the ICC assembles an international panel to work out the specific terms. Incoterms ® 2020 is the fourth revision in the last 30 years. Each of those revisions have been published in the first year of a new decade: 1990, 2000, 2010 and 2020. Incoterms ® 2020 marks the first time that authors from China and Australia were included on the panel. Other Incoterms ® 2020 authors are from the United States and the European Union.

Are Incoterms ® Laws?

No, Incoterms ® rules are not laws. Parties to a contract may agree to use Incoterms ® as a convenient way to make sure they understand the specific details of a contract without having to write out those details. However, the parties may decide to not use Incoterms ® and fully customize their contract instead.

What Are the 11 Terms of Incoterms ® 2020?

Here’s a general overview of the 11 rules of Incoterms ® 2020. Each rule includes sections and subsections. For detailed versions of the rules, see the answer to “How Do We Get a Complete Copy of Incoterms ® 2020?” below.

These seven terms are for any mode of transport:

• CIP/Carriage & Insurance Paid To | The seller delivers the goods to the carrier or the buyer’s appointed agent and pays for international carriage and insurance.
• CPT/Carriage Paid To | The seller delivers the goods to the carrier or buyer-appointed agent and pays for international carriage.
• DA P /Delivery At Place | The seller delivers the goods by making them available to the buy at a named place.
• DDP/Delivered Duty Paid | The seller delivers the goods by placing them at the buyer’s disposal, already cleared for import with duties paid and ready to be unloaded at a named place.
• DPU/Delivered at Place Unloaded | The seller delivers the goods by unloading them at a named place.
• EXW/ExWorks | The seller makes the goods available to the buyer at the seller’s premises. At that point the buyer is fully responsible for the cost and risk.
• FCA/Free Carrier | The seller delivers the goods (or pays to have them delivered) to the carrier or agent named by the buyer. The seller accepts the risk and cost of loading the goods on the means of conveyance provided by the carrier. Once the carrier is in possession of the shipment, responsibility is transferred to the buyer.

These four terms are for ocean and inland waterway transport only:

• CFR/Cost & Freight | The seller pays for the costs and freight of the goods to a named destination and delivers when the goods are on board a vessel nominated by the buyer.
• CIF/Cost, Insurance & Freight | The seller pays for the costs, freight and insurance to a named destination and delivers when the goods are on board a vessel nominated by the buyer.
• FAS/Free Alongside Ship | The seller delivers the goods by placing them alongside a vessel nominated by the buyer.
• FOB/Free on Board | Once the goods are on board a vessel nominated by the buyer, they are considered delivered by the seller. At that point they become the responsibility of the buyer. Until then, the seller is responsible for delivering the goods, loading them onto the ship and all costs of duties including the terminal handling charge.

What Significant Changes Have Been Made in Incoterms ® 2020?

Several significant changes from Incoterms ® 2010 have been made in Incoterms ® 2020, including:

• DAT (Delivery at Terminal) has been renamed DPU (Delivered at Place Unloaded) for 2020. The reason for the change is that goods frequently need to be delivered directly to a factory or warehouse rather than to a terminal.
• FCA (Free Carrier) has been updated to fix what was a common problem with transactions involving letters of credit. Banks often require the seller to present a Bill of Lading with an On-Board notation so the bank could recognize that the transaction was complete before making payment on the letter of credit. Incoterms 2010 did not provide for the option of an On-Board notation; Incoterms 2020 does.
• The level of insurance required for CIP (Carriage & Insurance Paid To) has been raised, while the requirement for CiF (Cost, Insurance & Freight) remains the same. The difference in requirements is because CIF is far less likely to cover goods with a high value per unit. In both cases, the seller is responsible for the cost of insurance.
• Unlike Incoterms 2010, Incoterms 2020 recognizes that sellers might deliver goods using their own vehicles (DIY seller) without the involvement of a third party to make the delivery for them.
• Security has become a greater concern since 2010, and Incoterms 2020 recognizes the heightened security requirements now in effect. Incoterms 2020 rules detail those requirements when discussing buyer/seller responsibilities for each trade item.

Is Incoterms ® 2020 Now the Only Version that Can Be Used?

No, Incoterms ® 2020 is not the only version of the rules that can be used. In fact, any previous edition can be cited in a contract simply by stating the year of that version. For example, the rule for Cost, Insurance & Freight (CIF) has changed for 2020. If the parties to the agreement wanted to use the rules from 2010, that rule would be cited in the contract as CIF 2010. If the contract were to state CIF with no year following it, then CIF 2020 would apply, as it is now the default rule. To avoid confusion, it is best to always state the version year for each Incoterms ® rule in the contract.

How Do We Get a Complete Copy of Incoterms ® 2020?

Any business that engages in international trade on a regular basis would be well-advised to become familiar with the details of the Incoterms ® 2020 rules and to keep a copy of the complete rules on hand for reference. Here are two ways to get the complete rules. Please note that Jaguar Freight does NOT receive a commission for sales of Incoterms ® 2020.

If you’re paying in euros, you can purchase a copy of Incoterms ® 2020 as a book or eBook directly from the International Chamber of Commerce .

If you’re paying in US dollars, Incoterms ® 2020 is available in paperback on Amazon.com .

What Should We Do If We Aren’t Sure We Understand Certain Rules?

Jaguar Freight is always here to help. If there are Incoterms ® 2020 rules or rule changes that you find confusing. don’t hesitate to contact your Jaguar Freight agent at (516) 600-0170 or send us a message .

Global Headquarters Jaguar Freight 70 E. Sunrise Highway, Suite 500 Valley Stream NY 11581 New York, USA: +(1) (516) 239-1900 Antwerpen, Belgium: +32 3 375 36 40 London, United Kingdom: +44 20 3047 1440

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Nucleus Marine

The Maritime News & HSEQ Experts

Incoterms 2020 – Explained and what changes in 2020.

May 14, 2020 by Admin 13 Comments

The International Chamber of Commerce have published new Incoterms® 2020 that have come into effect from the 1st of January 2020.  The ICC originally published Incoterms® in 1936 and have continually made updates to reflect the changes to the Global Trade environment.  It’s important that all parties involved in trade clearly understand the changes and how they apply to global supply chains.

Incoterms® play such a vital role in the world of global trade.  Incoterms® 2010 or Incoterms® 2020 may seem complicated, but it’s imperative that buyers and sellers clearly understand how they work and their own obligations along the supply chain.

Note: The content of this article and chart is only for general information purposes and shall not in any circumstances be considered bespoke legal advice or professional advice.

What are Incoterms?

Put simply, Incoterms are the selling terms that the buyer and seller of goods both agree to during international transactions.  These rules are accepted by governments and legal authorities around the world. Understanding Incoterms® is a vital part of International Trade because they clearly state which tasks, costs and risks are associated with the buyer and the seller.

The Incoterm states when the seller’s costs and risks are transferred onto the buyer.  It’s also important to understand that not all rules apply in all cases.  Some encompass any mode or modes of transport.  Transport by all modes of transport (road, rail, air and sea) covers FCA, CPT, CIP, DAP, DPU (replaces DAT) and DDP.  Sea/Inland waterway transport (Sea) covers FAS, FOB, CFR and CIF, which we explain below.

Why are Incoterms® vital in International Trade?

Incoterms® are referred to as In ternational Co mmercial Terms .  They are a set of rules published by the International Chamber of Commerce (ICC) , which relate to International Commercial Law.  According to the ICC, Incoterms® rules provide internationally accepted definitions and rules of interpretation for most common commercial terms used in contracts for the sale of goods’.

All International purchases will be processed on an agreed Incoterm to define which party legally incurs costs and risks.  Incoterms® will be clearly stated on relevant shipping documents.

An overview of Incoterms® 2020 for 11 Terms, 7 for any mode of transport.

Exw – ex-works  or ex-warehouse.

• Ex works is when the seller places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.).
• The seller does not need to load the goods on any collecting vehicle. Nor does it need to clear them for export, where such clearance is applicable.

FCA – Free Carrier

• The seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.
• The parties are well advised to specify as explicitly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.

FAS – Free Alongside Ship

• The seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment.
• The risk of loss of or damage to the goods passes when the products are alongside the ship.  The buyer bears all costs from that moment onwards.

FOB – Free On Board

• The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered.
• The risk of loss of or damage to the goods passes when the products are on board the vessel.  The buyer bears all costs from that moment onwards.

CFR – Cost and Freight

• The seller delivers the goods on board the vessel or procures the goods already so delivered.
• The risk of loss of or damage to the goods passes when the products are on board the vessel.
• The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

CIF – Cost, Insurance and Freight

• The seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the products are on the ship.
• The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.
• The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

CPT  – Carriage Paid To

• The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such site is agreed between parties).
• The seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

CIP – Carriage And Insurance Paid To

• The seller has the same responsibilities as CPT, but they also contract for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.
• The buyer should note that under CIP the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

DAP – Delivered At Place

• The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination.
• The seller bears all risks involved in bringing the goods to the named place.

DPU – Delivered At Place Unloaded (replaces Incoterm® 2010 DAT)

• DPU replaces the former Incoterm® DAT (Delivered At Terminal).  The seller delivers when the goods, once unloaded are placed at the disposal of the buyer at a named place of destination.
• The seller bears all risks involved in bringing the goods to, and unloading them at the named place of destination.

DDP – Delivered Duty Paid

• The seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination.
• The seller bears all the costs and risks involved in bringing the goods to the place of destination.  They must clear the products not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.

What are the differences between Incoterms® 2010 and Incoterms® 2020?

The main explanations of Incoterms® 2020 have remained the same, with a few key updates and changes.  The main change includes a new DPU term replacing DAT, along with other changes to Incoterms® as below.  It’s imperative that all parties involved in global trade understand these updates and how they may affect your supply chain.

New Incoterm® DPU Replaces DAT

The previous Incoterm® DAT (Delivered at Terminal) is now called DPU (Delivered at Place Unloaded.  It was decided to change the term to DPU to remove confusion that arose in the past. In the past, DAT required ‘Delivery at Terminal (unloaded)’, however the word “terminal” caused confusion.  The new term DPU (Delivery at Place Unloaded) covers ‘any place, whether covered or not’.

Different level of insurance cover between CIF and CIP

CIF and CIP are the only two Incoterms® that require the seller to purchase insurance in the buyer’s name.  Under Incoterms® 2010 the insurance cover for both CIF and CIP was required under Institute Cargo Clause C. Under the new Incoterms® 2020, CIP requires insurance cover complying with Institute Cargo Clause A.  Clause A covers a more comprehensive level of insurance which is usually suitable for manufactured goods, where Clause C would likely apply to commodities.

In summary:

• CIF remains the same, it requires ‘Institute Cargo Clause C’ insurance cover – Number of listed risks, subject to itemized exclusions.
• CIP now requires an upgraded ‘Institute Cargo Clause A’ insurance cover – All risk, subject to itemized exclusions.

Updated Costs and Listings

Costs became quite a problem with Incoterms® 2010 with some parties.  In some cases carriers were changing their pricing so sellers were often faced with new back charged terminal handling charges.  Incoterms® 2020 now provides much more detail around costs and now appear under the A9/B9 sections of the rule. This clearly states which costs are allocated to each party.

Increased Security Requirements, Allocations and Costs

In a world with increasing security requirements, the Incoterms® 2020 rules now provide more detail around security allocations and necessary costs.  For each Incoterm® rule, the security allocations have been added to A4/A7 and the associated costs have been added to A9/B9.

Buyer’s and Seller’s Own Transport

Under Incoterms® 2010 it was assumed that all transport would be undertaken by a third party transport provider.  Updates to Incoterms® 2020 allows for the provision for the buyer or seller’s own means of transport. This recognizes that some buyers and sellers are using their own methods of transport, including trucks or planes to get goods delivered.

• This allows for the buyer’s own means of transport under the FCA rule
• This allows for the seller’s own means of transport under DAP, DPU and DDP.

FCA, FOB and the Bill of Lading Process

Updates were made to the previous Incoterms® 2010 to encourage exporters of containerized goods to use the FCA Incoterm®.  In reality most parties were still using FOB when they should have been using FCA. This is because even experienced sellers still wanted to use FOB because they wanted the contract to be under a Letter of Credit.

Therefore provisions have been made to the Incoterms® 2020 to state that the buyer must instruct the carrier to issue a transport document stating that the goods have been loaded – i.e a Bill of Lading with an ‘on board’ notation.  In the past carriers have frequently refused to issue a Bill of Lading with a notation to the seller if they have received the goods from an intermediary transport (such as a truck), instead of directly from the seller.

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Incoterms® 2020 – 7 key changes you need to know [update]

Incoterms 2020 are now live. DAT has changed to DPU, insurance points are clarified on C-terms, transport security is now well defined, own transport is accounted for, changes to FCA/FOB regarding Bills of Lading…

By Bob Ronai

Last modified Wednesday January 31, 2024

Estimated reading time: 3 minutes

Updated every 10 years, ICC Incoterms 2020 rules define the responsibilities of buyers and sellers for the delivery of goods under sales contracts.

They are the authoritative rules for determining how costs and risks are allocated to the parties.

Incoterms rules are all about the delivery, which is reflective of the key changes in Incoterms® 2020.

There are very few court cases on the interpretation of Incoterms rules, rather, the problems that normally arise are due to the wrong use of an Incoterms rule.

Buyers and sellers using the right Incoterms rules are often set up well, therefore it’s essential for businesses to fully understand the risks and delivery associated with each incoterms rule.

7 Key changes to Incoterms 2020

• 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 are much more user friendly

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

1. DAT Incoterm changed to DPU (Delivery at Place Unloaded)

Following on from several rounds of consultation, the drafting group made the choice of removing the word ’terminal’ as it often caused confusion.

DAT required Delivery at Terminal (unloaded), however, after receiving feedback from practitioners, the drafting committee decided to change the term to DPU (Delivery at Place Unloaded), to broadly cover ‘ any place, whether covered or not ’.

2. Insurance cover differs between CIF and CIP

Under CIF and CIP , the seller buys insurance for the buyer.

In Incoterms® 2010, insurance is required under clause C, but in Incoterms® 2020, CIP requires insurance complying with Institute Cargo Clause (A) whereas CIF requires insurance under Clause C.

Because Clause A covers a more comprehensive higher level of insurance (e.g. for manufactured goods), whereas a lower level of cover from Clause C would probably apply to the commodities world.

3. The listing of costs 

All costs are now listed in the ‘Allocation of Costs’ sections for each rule, to avoid confusion.

As the ordering of articles within the Incoterms 2020 rules has also changed, these now appear in the A9/B9 section of each rule.

Costs were a big issue in the 2010 Incoterms®.

Carriers often changed their pricing structure to deal with add ons and sellers were often surprised by being back-charged terminal handling charges.

The A9 sections in the Incoterms rules guide now collect together the costs, with the principle aim of clearly stating the costs to each party.

4. Security Requirements

Cargo security has been particularly important since the 11 September 2001 World Trade Centre attacks, and the 2020 rules now address many of the security-related requirements that became so prevalent in the early part of this century.

From a carriage requirements perspective, security-related allocations have been added to A4 and A7 of each Incoterms rule and the necessary costs associated have been added to A9/B9 (see 3).

5. Own transport 

Incoterms 2010 rules assumed that goods carried from the seller to the buyer were via a 3rd party.

Incoterms 2020 allows for the buyer to use their own means of transport in the FCA rules and the seller to use their own means in the D rules.

6. FCA and Bills of lading

According to FCA, part B4, ‘The buyer must contract  or arrange  at its own cost for the carriage of the goods’.

There is a gap in delivery between FCA and FOB . If you’re selling FCA, your delivery point is different to FOB . The difference between FCA and FOB to the seller is a significant cost and risk.

In the 2010 Incoterms rules, exporters of goods in containers were encouraged to use FCA, which seemed best for both parties.

However, many people were using FOB when they should’ve really been using FCA.

Even sophisticated sellers said they wanted to use FOB, because a standard letter of credit requires an onboard bill of lading to be presented.

Therefore the sellers were often taking the risk and using FOB instead because they wanted to get paid under the LC.

The Incoterms® 2020 FCA extra provision now states that if the parties have so agreed, the buyer must instruct the carrier to issue to the seller, at the buyer’s cost and risk, a transport document stating that the goods have been loaded (such as a bill of lading with an on board notation).

7. Presentation and design

Incoterms® 2020 rules have much more extensive explanatory notes, with better diagrams, a different structure for users and a reordering of rules to make delivery and risk more obvious.

Maritime-related rules still haven’t changed and remain at the back of the rule book as they still might be used for bulk commodities. 

That’s not all folks! We’ve got two more points worth mentioning when it comes to Incoterms 2020!

Despite an ‘effective’ date of 1 January 2020, there is still no obligation to use Incoterms 2020. As long as both parties agree and clearly state so, they can use any set of Incoterms that they want – even the original Incoterms 1936 if they really want to (although we do not recommend this!). So what does ‘effective 1 January 2020’ actually mean? If you haven’t made it clear in your contract which Incoterms version to refer to, or have a flexible contract which states that when the contract is effective, the latest Incoterms® rules apply, then the 2020 rules will apply in these circumstances. That said, it’s estimated that the Incoterms 2020 rules might take 1-2 years for the market to adopt.

3 tips on how to use Incoterms correctly:

• Choose the right rule
• Specify the place / port precisely
• Incorporate them into the contract as well as the LC and invoice

Special thanks to Bob Ronai for his amends on this article. Read his e-book here .

We have an Incoterms 2020 Podcast for you, brought to you by the ICC United Kingdom

Incoterms  – All you need to know

The Incoterms are a series of pre-defined commercial terms designed to help prevent confusion in foreign trade contracts by clarifying the obligations of buyers and sellers.  While they are in heavy use today, their origin dates back to the early 20th century.

About the Author(s)

Bob Ronai's background in exporting and importing stretches over more than 50 years, initially in international banking then in the world of international commerce.

Related Posts

• How to use Incoterms® proficiently: risk, responsibility, and transfer operations (5th December 2022)
• Motivations and rationale for variation of Incoterms® rules (14th June 2022)
• Delivery for the maritime Incoterms® rules – FAS, FOB, CFR, CIF (17th May 2022)

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Incoterms 2020 Introduction

No. Free028

ISBN : Free0028

• Export / Import
• International trade
• Free documents

You need help, more information or a quote ?

This introduction explains what the Incoterms® 2020 rules do and do NOT do and how they are best incorporated.

It sets out the important fundamentals of the Incoterms® rules: the basic roles and responsibilities of seller and buyer, delivery, risk, and the relationship between the Incoterms® rules and the contracts surrounding a typical contract of sale for export/import and also, where appropriate, for domestic sales.

The text explains how best to choose the right Incoterms® rule for the particular sale contract; and sets out the central changes between Incoterms® 2010 and Incoterms® 2020.

RULES FOR ANY MODE OR MODES OF TRANSPORT

• EXW | Ex Works
• FCA | Free Carrier
• CPT | Carriage Paid To
• CIP | Carriage and Insurance Paid To
• DAP | Delivered at Place
• DPU | Delivered at Place Unloaded
• DDP | Delivered Duty Paid

RULES FOR SEA AND INLAND WATERWAY TRANSPORT

• FAS | Free Alongside Ship
• FOB | Free On Board
• CFR | Cost and Freight
• CIF | Cost Insurance and Freight

Discover  the key changes in  Incoterms® 2020 or download the Incoterms®2020 mobile application  via the Apple App Store and Google Play .

INTRODUCTION TO INCOTERMS® 2020

ARTICLE-BY-ARTICLE TEXT OF RULES

INCOTERMS® 2020 DRAFTING GROUP

INCOTERMS® PUBLICATIONS AND RESOURCES

OTHER INTERNATIONAL TRADE RELATED PUBLICATIONS

International Chamber of Commerce

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Incoterms® 2020 PDF - Download chart now - International Trade Regulations - Latest Version

January 31, 2024

Incoterms® 2020

(free pdf download available), what are incoterms.

The Incoterms® rules are the international regulations that apply to the trade for the sales of goods worldwide; these rules are in place to clarify the buyer's responsibilities and the seller/shipper in the international shipments of global goods. The Incoterms® rules assist the mutual understanding of responsibilities for the sale of goods worldwide between buyers and sellers and the export and import shipping process.

Launched by the International Chamber of Commerce (ICC) , the new set of rules entered into force on January 1st, 2020. As of this date, all sales contracts should refer to the Incoterms® 2020 rules as the latest version of the Incoterms® rules.

Why are Incoterms used in international shipping?

They are the authoritative rules for determining how costs and risks are allocated to the parties; they guide individuals and companies participating in the import and export of global trade. These rules are regularly incorporated into contracts and have become part of the daily language of trade between buyers and sellers. 

Key Incoterms 2020 changes - What's new?

• Provides for demonstrated market need concerning bills of lading (BL) with an on-board notation and the Free Carrier (FCA) rule.
• Aligns different insurance coverage levels in Cost Insurance and Freight (CIF) and Carriage and Insurance Paid to (CIP).
• Includes arrangements for carriage with own means of transport in Free Carrier (FCA), Delivery at Place (DAP), Delivery at Place Unloaded (DPU), and Delivered Duty Paid (DDP).
• There is a change in the three-letter name for Delivered at Terminal (DAT) to Deliver at Place Unloaded (DPU).
• Includes security-related requirements within carriage obligations and costs.

Download Incoterms® 2020 Highlights in PDF Here

'Incoterms® 2020 rules make business work for everyone by facilitating trillions of dollars in global trade annually. Because they help importers and exporters around the world to understand their responsibilities and avoid costly misunderstandings, the rules form the language of international sales transactions, and help build confidence in our valuable global trading system.' ICC Secretary General John W.H. Denton AO

Valuable Incoterms 2020 information

Incoterms ®  does not constitute a complete contract but rather becomes a part of it. For its application, the following formula should be used:

(The chosen Incoterm ®  rule) followed by (Named port, place or point) Incoterms ®  2020

Example: "CIF Amsterdam Incoterms ®  2020" or "DAP 1500 Rankin Road, Houston, TX United States Incoterms ®  2020."

If there is no year stated in the Incoterms®, then the following applies:

• Until December 31st, 2019, the Incoterms ®  2010 apply.
• From January 1st, 2020, the Incoterms ®  2020 applies.

Suppose a different year is stated, e. g. Incoterms ®  1980, then respective terms apply.

Don't get confused by Incoterms terminology and use the correct international commercial terms! Crane Worldwide Logistics created an Incoterms® 2020 PDF chart to help better understand these changes. Are you familiar with all the shipping terms? Reach out if we can provide further support on international regulations!

Download Incoterms® 2020 Matrix in PDF Here

Need a quote for your import or export shipments, need support with your Incoterms?

Our worldwide logistics team can help you. Reach out! We can answer any questions you may have about Incoterms - shipping terms made easy!

How many Incoterms are there in 2020?

Incoterms 2020 summary, any mode of transport.

• EXW - Ex Works - Seller is only responsible for having the goods packed made available at the seller's premises. The buyer bears the full risk and costs from there to the destination - including the loading of the cargo.
• FCA - Free Carrier - Seller is only responsible for delivery to the named place. The seller is responsible for the loading. Risk and cost are transferred to the buyer as soon as delivered at the named place. Unloading is the buyer's responsibility. 
• CPT - Carriage Paid To - Seller arranges the transportation and costs to the named destination. Risk is transferred to the buyer once delivered at the first carrier. 
• CIP - Carriage and Insurance Paid to - Seller arranges the transportation, costs, and insurance on behalf of the buyer to the named place at the destination. Risk is transferred to the buyer once delivered at the first carrier. The seller must obtain extensive insurance cover complying with insurance Cargo Clauses (A) or a similar clause in the buyer's name.
• DAP - Delivered at Place - Seller delivers the goods to the agreed place at the destination. Seller assumes all costs and risks until the goods are ready for unloading at the named place of destination. 
• DPU - Delivered at Place Unloaded  - Seller assumes all costs and risks until the goods are unloaded at the agreed named place of destination. The buyer is responsible for import customs formalities.
• DDP - Delivery Duty Paid  - Seller delivers goods to the agreed place destination. Seller assumes all costs - including import formalities and risks until the goods are ready for unloading at named place of destination.

Sea and Inland Waterway Transport

• FAS - Free Alongside Ship - Seller is responsible for delivering goods at the port alongside the vessel. From this point, onwards risk and cost transfer to the buyer. 
• FOB - Free On Board - Seller is responsible for goods loaded onboard the vessel. Risk and cost are transferred as soon as the goods have been loaded on board the vessel. 
• CFR - Cost and Freight  - Seller covers freight costs to the named port of destination or place. Risk is transferred as soon as the goods have been loaded on board the vessel.
• CIF - Cost, Insurance, and Freight - Seller covers insurance and freight costs to the named port of destination or place. Risk is transferred as soon as the goods have been loaded on board the vessel. Seller is required to obtain the minimum insurance cover complying with Institute Cargo Clauses (C) in the buyer's name.

Did you know? The most commonly used Incoterms are EXW – Ex-Works · DAP – Delivered At Place · DDP – Delivered Duty Paid.

8 facts about Incoterms you should know

• The international regulations all started way back over 200 years ago : In 1812, British Courts established Free On Board (FOB) shipment terms indicating who is liable for damage in shipping were established. These established rules were the seeds that would eventually grow into Incoterms® we know today!
• Booming Trade : Up until 1936, the original FOB rules were updated only once. It was in this year that the ICC would publish 6 rules, making these the first truly global standardization for worldwide trade.
• World War II : After the second world war, lots of international trade standards and agreements had to be mended, re-written, and new rules established.
• New Modes = New Rules : As new forms and methods of transportation emerged, Incoterms had to evolve as well. In 1953, 3 new rules were added to include Trains, Trucks, and specific costs.
• FOB : The first air freight was officially delivered in 1910, but it took until 1976 to include air FOB rules into Incoterms®!
• Electronification : in 1990, Incoterms® underwent a massive re-build, as more and more electronic services became available.
• Ever-changing landscape : In 2010, with so many changes and increases with international shipping, Incoterms® had to make adjustments as well. In 2010, 4 Incoterms were done away with, and 3 all-new Incoterms were added.
• Incoterms® 2020 were released!

Free Incoterms® 2020 Training available to you...

Watch now our webinar about incoterms® 2020 and learn from christopher palmer, crane worldwide logistics' director of projects. .

With a wealth of logistics industry expertise, learn more about the different Incoterms and the impact on buyers and shippers when using the different commercial terms. Crane Worldwide Logistics is available to support your international shipments. Reach out below if you would like to learn more. 

For more information about all of the incoterm rule definitions, you can check out our Incoterms Glossary , highlighting the detail on all of 11 Incoterm international shipping regulations. EXW, FCA, CPT, CIP, DAP, DPU, DDP for any mode of transport. FAS, FOB, CFR, CIF for sea and inland waterway transport. If you have any questions relating to Incoterms or require freight forwarding or logistics support, please don't hesitate to reach out to our logistics experts. Crane Worldwide Logistics is present in 120 locations in 30 countries, we are here to help!

Check it out here   in our Knowledge Center along with market updates, industry insights, and more. We are here to help you navigate your international shipping needs, reach out below for logistics support.

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Incoterms® 2020 Masterclass

Our most comprehensive training ever on the Incoterms® Rules. Combine a globally-recognised certification with practical, instructor-led workshops.

Why take the Incoterms® 2020 Masterclass?

Our most comprehensive training ever on the incoterms® rules.

This Masterclass combines our bestselling self-paced online course with two, 3-hour online workshops (limited to 25 people) that focus more on the practical application of the rules. Together, they will ensure you have an up-to date, compliant and in-depth understanding of the rules and provide you with a new level of confidence, expertise and authority.

WHAT YOU WILL LEARN

Over the course of this Masterclass you will learn

The origins and fundamentals of the Incoterms rules

How to identify the fundamental commercial purposes of each rule, the risks involved when using the wrong rule for your transaction., the differences between incoterms® 2020 vs 2010, the buyer/seller obligations for each rule, how to apply incoterms® 2020 rules in operational terms at real workplaces, the duties owed by sellers and buyers, including the risks/costs involved, how to select which rule would be best for a particular transaction based on mode of transportation and the risk profile of a buyer or seller, the operational challenges of the incoterms® and how to overcome them, choose your cohort.

This Masterclass will run in 3 cohorts with a maximum of 25 people per cohort .

APAC Cohort

• 13 May 2024: Start Incoterms 2020 Certificate (online course)
• 3-hour online workhops on 27 May & 10 June 2024
• Workshops from 7-10pm SGT
• Candidates must complete final online exam by 12 Aug 2024.

3-months access to the online learning materials 

Hurry, only 25 seats available for this cohort

Europe, Middle East & Africa (EMEA) Cohort

• 3-hour online workhops on 28 May & 11 June 2024
• Workshops from 6.30-9.30pm CET

Americas Cohort

• 3-hour online workhops on 29 May & 10 June 2024
• Workshops from 6.30-9.30pm EST

Praveenkumar Miriyala Trade Specialist, India

Getting training directly from the 'horse's mouth' is more valuable to me - and other people looking to work with me - than having my knowledge certified by a third party who has not created the Incoterms® rules."

Bonnie M. Kersch Senior Trade Advisor, USA

"I really wanted something to say ‘Hey I really know the Incoterms rules and let me prove it to you. Look I got this certification’.  Essentially I wanted the ICC brand and reputation to back up my credentials."

HOW IT WORKS - 5 STAGES OVER 3 MONTHS

Learn straight from the source

An Incoterms® credential from the International Chamber of Commerce (ICC) - the organisation that creates the rules – makes it easy for you to quickly confirm your expertise and win your clients’ trust. This Masterclass includes the only online qualification on the Incoterms® 2020 approved by the ICC and workshops led by an ICC registered Incoterms® 2020 trainer. Get an authentic understanding of the rules.

MEET YOUR MASTERCLASS TRAINER

Miguel Angel Bustamante Morales

Icc certified trainer on the incoterms ® 2020 rules.

Since 1997, Miguel has been an advisor and training facilitator for ICC Mexico on different foreign trade topics and he is a certified ICC trainer on the Incoterms® 2020 Rules. Miguel is also a former president of the ICC Banking Commission and has been an active participant in the last three revisions of the Incoterms® Rules; 2000, 2010 and 2020.

Learn how to apply the Incoterms® Rules operationally at real workplaces

This masterclass is not just theory. During the two 3-hour live workshops, you will learn the various operational challenges in using Incoterms® 2020 and how to overcome them through real-life case studies, group work and demonstrations by our expert trainer.

Connect and collaborate with other trade professionals

During this masterclass, you will examine and discuss case studies with other trade professionals in your cohort via our discussion forum. This focus on group work and collaboration with other trade professionals will help enhance your understanding of how to apply the rules ahead of taking the final online exam.

REGISTER NOW - CHOOSE YOUR COHORT

Karussha Govender Trade Compliance Officer, South Africa

"My colleagues often ask me: ‘Is this the right Incoterms® rule to use?’. The Incoterms® 2020 Certificate ensured that I could provide the correct information and I felt comfortable explaining it to them in simple terms."

Emiliano Introcaso Export Advisor, Canada

"I feel like the champion of the rules within my organisation and the go-to person when it comes to Incoterms® 2020. It feels good to be able to provide a level of authority and advice that others can’t."

Earn an ICC qualification without leaving home

The Incoterms® 2020 Masterclass is 100% online, including the two workshops and exam, so you can fit learning in around a busy schedule. No classroom sessions to attend. No expensive travel required. All you need is a stable internet connection.

This Masterclass is running in 3 cohorts:

• Americas - you will enrol on our Incoterms 2020 Certificate on 13 May 2024. You will have until 12 August 2024 to complete the final online exam (3 months). There will be two 3-hour online workshops on 29 May and 10 June 2024 for you to attend.
• EMEA - you will enrol on our Incoterms 2020 Certificate on 13 May 2024. You will have until 12 August 2024 to complete the final online exam (3 months). There will be two 3-hour online workshops on 28 May and 11 June 2024 for you to attend.
• APAC  - you will enrol on our Incoterms 2020 Certificate on 13 May 2024. You will have until 12 August 2024 to complete the final online exam (3 months). There will be two 3-hour online workshops on 27 May May and 10 June 2024 for you to attend.

This Masterclass will run in 3 cohorts, with the online workshops for each timed to be convenient for a specific timezone:

Americas cohort : The workshops will run at 6.30 - 9.30 pm EST on 29 May and 10 June 2024. Both workshops will be recorded and available to watch on demand after they have taken place.

EMEA cohort: The workshops will run at 6.30 - 9.30 pm CET on 28 May and 11 June 2024. Both workshops will be recorded and available to watch on demand after they have taken place.

APAC cohort: The workshops will run at 7.00 pm - 10.00 pm SGT on 27 May and 10 June 2024. Both workshops will be recorded and available to watch on demand after they have taken place.

We recommend that you have a copy of the Incoterms 2020 eBook to refer to throughout the Masterclass. If you do not already own the book you can purchase it at a 38% discount after you register for the Masterclass. A discount code will be shared with you once you begin the Masterclass.

Your purchase includes 3 months access to lessons 1-4 in our Incoterms® 2020 Certificate . You can access the lessons as many times as you like within the 3-month access period which ends on 12 August 2024. There are also downloadable documents that you can refer to after your access period has finished. These include:

• A study guide recapping the main points from the lessons
• A guide for using the Incoterms in sales contracts
• An overview of the obligations for each of the 11 rules

The Incoterms®  2020 Masterclass includes 10 hours of online learning.

Lessons 1-4 of the Incoterms 2020 Certificate (online course) will take approximately 4 hours to complete.

Each of the 2 online workshops are 3 hours long.

You will go through lessons 1-4 of the course and the 2 online workshops over a period of 4 weeks. At the end of this period you will then have a further 2 months in which you must complete the final online exam (1 hour). The total access period is 3 months only.

You can take the exam as soon as you want after completing the final workshop. This means that the fastest you can complete the Masterclass is over 1 month (4 weeks to complete the course and workshops and then 1 hour to complete the exam).

All candidates need to be able to read and write in English.

The Incoterms® 2020 Masterclass is accredited by the London Institute of Banking and Finance (LIBF), the Institute of Banking and Finance Singapore (IBF), The Bankers Association for Finance and Trade (BAFT) and the Global Trade Professionals Alliance (GTPA) and the National Customs Brokers & Forwarders Association of America, Inc's (NCBFAA) Educational Institute's (NEI) Continuing Education Program.

All the online workshops will be recorded so you can watch them on demand if needed. However, we strongly recommend that you attend them live in order to get the best learning experience.

Completing the ICC Academy Incoterms® 2020 Masterclass does not qualify you as a ICC registered trainer.

If you would like to become an ICC certified trainer you will need to be nominated by your local ICC National Committee and complete a special trainers exam.  You can find all the details here .

Your purchase of the Incoterms® 2020 Masterclass includes one attempt at the final online exam. If required, a retake can be purchased for USD $60 if you are still within your 3-month access period by contacting our Help Desk at [email protected]

• 3-months access to ICC's online, self-paced Incoterms® 2020 Certificate
• Two, 3-hour online workshops with an ICC-registered Incoterms 2020 trainer
• One attempt at timed 1-hour online exam – if you pass (70%) you will receive an ICC Academy, industry-recognised certificate signed by our secretary general!
• Dedicated, full-time IT support

The Incoterms® 2020 Masterclass is targeted at professionals involved in trade and logistics, trade finance banking professionals and those working in legal and regulatory affairs. More specifically it is for the following departments and business functions:

• Corporate: Exporters and importers (in SMEs and big corporates), business development and marketing managers, sales or purchasing managers, accountants and audit teams
• Trade/logistics: Logistics providers, freight forwarders, custom brokers, general transportation carriers, insurance managers, commercial lawyers/arbitrators, and trade consultants
• Legal/regulation: Finance and procurement managers, compliance and risk managers, front-office relationship managers, and back-office trade finance and trade operations teams

Due to the immediate availability of our course content upon registration, ICC Academy has a strict no-refund policy for our courses and certifications. For more details, please refer to our Terms and Conditions .

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