The Incoterms deal with commercial terms pertaining to International Commercial law. The International Chamber of Commerce incoterms for 2020 identifies the responsibilities with respect to the buyers and sellers for delivery of goods during overseas trade. It also identifies when the risks on goods transfer from a seller to buyer. The new terms came into effect from January 1, 2020.
The following are the recent changes made in the incoterms.
- Delivered at Terminal (DAT) becomes Delivered at Place Unloaded (DPU). This has been renamed for the reason that in cases where buyer and seller want to have goods delivered anywhere other than the terminal.
- The onus lies with the seller for purchasing a higher level of insurance coverage, that is, 110 percent of the goods value as identified in the Clause A of Institute of Cargo Clauses under the revised term Cost Insurance and Freight (CIF). However, the insurance requirement has not been amended for Carriage and Insurance Paid To (CIP).
- Import and security requirements have been increased ever since the last ten years. The incoterms 2020 rules furnish these requirements in the buyer and seller responsibilities under each trade terms.
- Bill of lading should be issued by the buyer’s carrier with the on-board notation to the seller for initiating payment. Banks require the bill of lading and on-board notation to finalise the payment process.
- The incoterms 2020 identifies do-it-yourself (DIY) sellers who use their own transport for delivery of goods. The new terms state that either sellers can make a contract for transportation or arrange for the transportation.
Around every ten years, the ICC redefines the incoterms. Created primarily to make export businesses work, incoterms identifies the duties and responsibilities of both buyers and sellers. Redefining the icc incoterms every ten years refines the existing ones to make it even more valuable for promoting undisrupted global trade.