I. General Overview of Incoterms 2020
Incoterms (International Commercial Terms) are a set of rules defining international trade terms.
Incoterms 2020 is considered the most comprehensive version, improving clarity compared to 2010 and 2000 versions.
a) Purpose
Since the late 19th century, traders have used abbreviations like FOB and CIF to define delivery responsibilities.
However, differences in national practices led to misunderstandings and disputes.
? Objectives:
- Explain common trade terms
- Allocate responsibilities, costs, and risks
- Minimize disputes
b) Development History
- 1919: ICC established
- 1923: First study
- 1928: Second global survey
- 1936: First Incoterms issued
- 1953–1980: Updates for transport modes
- 1990: Full version (13 rules)
- 2000: Customs responsibilities clarified
- 2010: Reduced to 11 rules
- 2020: Latest version
II. Incoterms 2020 Rules
There are 11 rules, grouped into E, F, C, D:
- EXW – Ex Works
- FCA – Free Carrier
- FOB – Free On Board
- FAS – Free Alongside Ship
- CPT – Carriage Paid To
- CIP – Carriage & Insurance Paid To
- CFR – Cost and Freight
- CIF – Cost, Insurance & Freight
- DDP – Delivered Duty Paid
- DAP – Delivered At Place
- DPU – Delivered at Place Unloaded
| Group | Incoterms 2020 |
|---|---|
| Group E: Ex Works / Number: 1 |
– The seller prepares the goods for delivery to the buyer at the agreed location. |
| Group F: Unpaid Main Carriage / Number: 3 | – In this group, the seller must carry out export customs clearance at the buyer’s request and assist in preparing licenses, but does not perform import procedures and does not conclude an international transport contract. |
| Group C: Main Carriage Paid / Number: 4 | – The seller performs the tasks mentioned in Group F. However, the seller must additionally conclude a transport contract to deliver the goods to the destination specified by the buyer. – The seller is not responsible for import customs clearance. Risk transfers from the seller to the buyer once the goods are handed over to the carrier. |
|
Group D: Delivered at Place / Number: 3 |
– The seller is responsible for delivering the goods to a specific location designated by the buyer and bears all risks until the goods are safely delivered to the buyer. |
III. Key Changes in Incoterms 2020
– Better explanations
– Reorganized obligations
– Clearer cost structure
– FCA allows onboard B/L
– Insurance changes (CIF vs CIP)
– DAT replaced by DPU
– Cost sections moved to A9/B9
