Incoterms® 2020 : what changes for exporters?
On September 10, 2019, ICC Canada, the Canadian National Committee for the International Chamber of Commerce, launched the 2020 edition of Incoterms®. This new edition has been eagerly awaited by the transportation industry, as Incoterms are the rules that define the rights and duties of buyers and sellers in an international trade transaction, thus being of the utmost importance to exporters.
But what is an Incoterms®?
The Incoterms® rules are an essential component of an international sales contract. They help guide the company in its commercial transactions abroad. Specifically, they describe the obligations of the parties, the risks, i.e. when they are transferred from the seller to the buyer, as well as the distribution of costs between them.
The Incoterms® rules, codified in Paris, were introduced in 1936 and have since been revised regularly to adapt to the continuous changes in international trade. Since 1980, these revisions have been made every 10 years. The beginning of the 2020 decade has therefore brought changes to the Incoterms®.
Changes to the Incoterms®
This new version, in force from January 1, 2020 to December 31, 2029, does not include any major changes. In the 2020 version, the number of Incoterms® remains at 11 rules, 7 governing multimodal transport and 4 governing maritime transport. Finally, only one Incoterms® has changed.
List of Incoterms® 2020:
All modes of transportation
- 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
Maritime Transport only
- FAS | Free Alongside Ship
- FOB | Free On Board
- CFR | Cost and Freight
- CIF | Cost Insurance and Freight
Although their use is not mandatory, it is strongly recommended to use Incoterms® in an international sales contract. They allow to clearly define the commitments of each party in a context where the language barrier could bring misunderstandings.
Final list of Incoterms® 2020
- CIP : Carriage and Insurance Paid To
- CPT : Carriage Paid To
- CIF : Cost Insurance & Freight
- CFR : Cost and Freight
Here is an example of the wording of the Incoterms® 2020 rules to add to your contract if you wish to use them:
[the chosen Incoterms rule] [port, place or designated location] Incoterms 2020
Ex : FCA Montreal Incoterms 2020