What Is The Latest Incoterm Version?

The ICC (International Chamber of Commerce) had released the latest Incoterms 2020 which came into effect on January 1, 2020. The rules focus on the responsibilities of sellers and buyers for international delivery of goods. The terms tackle the risk of goods transfer between the buyer and seller. The previous Incoterms came into effect in 2010 and it has been 10 years since changes have been made. However, the ICC has the authority to update the terms as many times as it desires. It is crucial that one understands that Incoterms are rather voluntary and do not replace the sales contract.

A set of Incoterms cover international sales contracts where the responsibility of the delivery of goods is covered. Moreover, buyers and sellers have the freedom to choose an earlier set of terms such as the Incoterms 2010 or Incoterms 2000. They can even choose to ignore the Incoterms altogether.

So What Is New In The Incoterms 2020?
Understanding the latest developments in the new Incoterms 2020 is important. After months of speculations of what to expect from the Incoterms 2020, the latest rules have been unveiled. The changes are rather modest. The actual impact is yet to be known since the changes have yet to be fully incorporated for actual export-import transactions. So what should you expect from the Incoterms 2020? You need to read on to learn more.

One of the most obvious changes to have occurred to the previous Incoterms is the renaming of the term DAT (Delivered at Terminal) to DPU (Delivered at Place Unloaded). The reason why the term was renamed by the ICC is because of the fact that sometimes the seller or buyer desire that the delivery of goods to be conducted at a place other than the main terminal. The said term is commonly used for the consolidation of containers having multiple consignees. Moreover, it is also the only term which tasks the seller for the unloading of goods.

On-Board Bills of Lading and FCA
Another significant change in the latest Incoterms version relates to the term FCA (Free Carrier). Under the term, the seller would be responsible for making sure that the goods are available at a name place or its own premises. Hence, the seller has to load the goods onto the transport of the buyer. There were problems with the term as the seller was responsible for the loading of goods onto a truck or any other transport as hired by the buyer rather than the international carrier. Moreover, if the buyer and seller agreed to use a letter of credit for completion of the transaction, banks often required that the seller present the said bill of lading along with an on-board notation before getting paid.

Different Insurance Coverage Levels
Carriage and Insurance Paid to (CIP) and Cost Insurance and Freight to (CIF) are just the two Incoterms which identify the party that has to purchase insurance for its part of the journey. Thus, the responsibility fell on the seller. The latest Incoterms rules specify that the seller will be responsible for getting a higher insurance coverage level.