Содержание
Incoterms 2020 are international rules that define the terms of delivery of goods in international trade. The abbreviation derives from the English phrase International Commercial Terms. The Incoterms 2020 rules were developed by the International Chamber of Commerce (ICC) and entered into force on 1 January 2020, replacing the previous edition – Incoterms 2010.
What are Incoterms 2020
Incoterms 2020 serve as a kind of international trade language, helping the parties to international contracts clearly understand their obligations, rights, and risks in the context of sale and purchase transactions. The Incoterms 2020 delivery terms define the point of transfer of goods, the allocation of costs, and the division of risks between the parties to a cross-border contract.
The official text of Incoterms 2020 contains a detailed description of 11 terms, each of which is represented by a three-letter abbreviation and defines:
- The responsibilities of the seller and buyer regarding transport and insurance
- The point at which the risk of damage or loss of goods passes from seller to buyer
- The allocation of costs between the parties
- Responsibilities for export and import customs clearance
Incoterms 2020 regulate only the relationship between seller and buyer under a sale contract, and do not apply to relations with carriers, insurers, or banks.
Types of delivery under Incoterms 2020
Incoterms 2020 terms are divided into two main categories:
- Rules for any mode of transport (universal):
- EXW (Ex Works) – Ex Works
- FCA (Free Carrier) – Free Carrier
- CPT (Carriage Paid To) – Carriage Paid To
- CIP (Carriage and Insurance Paid To) – Carriage and Insurance Paid To
- DAP (Delivered at Place) – Delivered at Place
- DPU (Delivered at Place Unloaded) – Delivered at Place Unloaded
- DDP (Delivered Duty Paid) – Delivered Duty Paid
- Rules for sea and inland waterway transport:
- FAS (Free Alongside Ship) – Free Alongside Ship
- FOB (Free on Board) – Free on Board
- CFR (Cost and Freight) – Cost and Freight
- CIF (Cost, Insurance and Freight) – Cost, Insurance and Freight
Let us examine each of the Incoterms 2020 in more detail.
EXW Incoterms 2020
EXW (Ex Works) — under this term, the seller fulfils their delivery obligation when the goods are made available to the buyer at the seller’s premises or another named place (e.g. factory, warehouse, etc.).
Key features of EXW Incoterms 2020:
- Minimum obligations for the seller
- The buyer bears all costs and risks associated with loading the goods and transporting them from the seller’s premises to the destination
- The buyer is responsible for both export and import customs formalities
- Not recommended for international trade due to the complexity of export clearance for the buyer
FCA Incoterms 2020
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 agreed location.
Key features of FCA Incoterms 2020:
- The seller is responsible for export customs clearance
- Risk transfers from seller to buyer at the point the goods are handed over to the carrier
- The buyer arranges and pays for the main carriage
- The 2020 edition allows the parties to agree that the buyer will instruct the carrier to issue a bill of lading with an “on board” notation to the seller
CPT Incoterms 2020
CPT (Carriage Paid To) — the seller hands the goods over to a carrier or another person nominated by the seller at an agreed place and pays the cost of carriage to the named destination.
Key features of CPT Incoterms 2020:
- The seller pays for transport to the agreed destination
- Risk transfers from seller to buyer when the goods are handed over to the first carrier
- The seller is responsible for export customs clearance
- The buyer is responsible for import customs clearance
CIP Incoterms 2020
CIP (Carriage and Insurance Paid To) — the seller has the same obligations as under CPT, but must also obtain insurance cover for the benefit of the buyer.
Key aspects of CIP Incoterms 2020:
- The seller pays for delivery to the agreed destination
- The seller must provide insurance cover
- Under the 2020 edition, the required level of insurance has been increased from minimum coverage to “Clause A” (all risks) coverage
- Risk transfers to the buyer when the goods are handed over to the first carrier
DAP Incoterms 2020
DAP (Delivered at Place) — the seller fulfils their obligation 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.
Key features of DAP Incoterms 2020:
- The seller bears all risks associated with transporting the goods to the named destination
- The seller is responsible for export customs clearance and pays for transport to the agreed location
- The buyer is responsible for import customs clearance, as well as payment of duties and taxes
- The buyer arranges unloading of the goods
DPU Incoterms 2020
DPU (Delivered at Place Unloaded) is a new term introduced in Incoterms 2020, replacing DAT (Delivered at Terminal) from the previous edition. The seller fulfils their delivery obligations when the goods are unloaded at the agreed place of destination.
Key features of DPU Incoterms 2020:
- The seller is responsible for both delivery and unloading of the goods at the specified location
- The place of delivery can be any location, not just a terminal, as was the case under DAT
- The seller bears all risks until the goods are unloaded
- The seller handles export customs clearance, while the buyer is responsible for import formalities
DDP Incoterms 2020
DDP (Delivered Duty Paid) — the seller fulfils their delivery obligations when the goods are placed at the disposal of the buyer, having cleared import formalities and being ready for unloading at the named destination.
Key characteristics of DDP Incoterms 2020:
- Maximum obligations for the seller
- The seller bears all risks and costs until the goods arrive at the named place of destination
- The seller is responsible for both export and import customs clearance
- The seller pays all import duties, taxes, and other official charges
FAS Incoterms 2020
FAS (Free Alongside Ship) — the seller fulfils their delivery obligations when the goods are placed alongside the vessel (e.g. on a quay or barge) at the named port of shipment.
Key points of FAS Incoterms 2020:
- Applies only to sea and inland waterway transport
- Risk passes from seller to buyer once the goods are placed alongside the ship
- The seller is responsible for export customs clearance
- The buyer arranges and pays for the main carriage
FOB Incoterms 2020
FOB (Free on Board) — the seller fulfils their obligations when the goods have been loaded on board the vessel at the named port of shipment.
Main features of FOB Incoterms 2020:
- Applies only to sea and inland waterway transport
- Risk passes from seller to buyer when the goods are on board the vessel
- The seller is responsible for export customs clearance
- The buyer arranges and pays for the main transport and insurance
CFR Incoterms 2020
CFR (Cost and Freight) — the seller completes delivery when the goods have been loaded onto the vessel at the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination.
Key points of CFR Incoterms 2020:
- Applies only to sea and inland waterway transport
- Risk passes from seller to buyer when the goods are on board the vessel at the port of shipment
- The seller pays for delivery to the port of destination
- The seller is responsible for export customs clearance
CIF Incoterms 2020
CIF (Cost, Insurance and Freight) — the seller has the same obligations as under CFR, but must also obtain insurance against the buyer’s risk of loss or damage to the goods during transit.
Key characteristics of CIF Incoterms 2020:
- Applies only to sea and inland waterway transport
- Risk passes from seller to buyer at the port of shipment, when the goods are on board the vessel
- The seller pays for carriage to the port of destination
- The seller must obtain insurance with minimum cover
- The seller is responsible for export customs clearance
Differences between Incoterms 2010 and 2020
The transition from Incoterms 2010 to Incoterms 2020 introduced several important changes that parties to international trade should be aware of:
- Replacement of DAT with DPU. The change expands the term’s applicability, as unloading can now occur at any location, not just at a terminal.
- Changes in insurance requirements for CIP. In the previous edition, CIP and CIF required minimum insurance coverage (under Institute Cargo Clauses “C”). In Incoterms 2020, CIP requires insurance under Clause “A” (all risks), while CIF still requires only minimum cover.
- New option added to FCA regarding on-board bills of lading. The parties may now agree that the buyer instructs the carrier to issue a bill of lading with an on-board notation to the seller.
- Inclusion of security-related costs in transportation and delivery obligations. Incoterms 2020 now explicitly allocate security responsibilities between the parties at each stage of transport.
- More detailed explanations and examples have been included in the official text to help users better understand each term and apply them correctly.
How to Properly Apply Incoterms 2020
To ensure effective use of Incoterms 2020 delivery terms, it is recommended to follow these guidelines:
- Clearly specify the chosen Incoterms 2020 term in the contract, for example: “FOB Odesa, Ukraine, Incoterms 2020” or “DAP Marszalkowska 115, Warsaw, Poland, Incoterms 2020”.
- Precisely indicate the place of delivery — this is especially important for terms such as EXW, FCA, DAP, DPU, and DDP, where the exact location is crucial.
- Bear in mind that Incoterms 2020 do not govern transfer of ownership of the goods, pricing, payment terms, breach of contract consequences, or force majeure provisions. These issues must be addressed separately in the sale and purchase agreement.
- Select the appropriate term based on the mode of transport. For example, FAS, FOB, CFR, and CIF are intended exclusively for sea and inland waterway transport.
- Consider the specifics of customs procedures in both the exporting and importing countries when choosing the delivery term. For Ukrainian exporters to the EU, it is often more advantageous to use FCA or DAP, as import formalities within the EU can be complex.
Conclusion
Incoterms 2020 are a key tool for regulating international trade and avoiding misunderstandings between the parties to a sale contract. When drafting cross-border agreements, it is advisable to refer to the official Incoterms 2020 publication issued by the International Chamber of Commerce to ensure correct and consistent application of these rules.
If you require legal advice on applying Incoterms 2020 in international trade contracts, feel free to contact me via email, Telegram or WhatsApp — I will help you structure your transaction to maximise its commercial benefit and protect you against potential risks.
