Incoterms 2020 – Summary of Changes from 2010

There has been a slight change to Incoterms for 2020’s revision from Incoterms 2010. Please see below:

The layout for Incoterms 2020 has been changed as follows:

  • A1-B1 General obligations (as before)
  • A2-B2 Delivery / taking delivery (formerly A4-B4)
  • A3-B3 Transfer of risks (formerly A5-B5)
  • A4-B4 Carriage (formerly A3-B3)
  • A5-B5 Insurance (formerly covered with carriage in A3-B3)
  • A6-B6 Delivery / transport documents and proof of delivery (formerly A8-B8)
  • A7-B7 Export/import clearance (formerly A2-B2 as Licenses, authorizations, security clearance and other formalities)
  • A8-B8 Checking/packaging/marking (formerly A9-B9)
  • A9-B9 Allocation of costs (formerly A6-B6)
  • A10-B10 Notices (formerly A7-B7)
  • Reflect the order of importance in contracts
  • Provide an individual task line for insurance
  • Place cost near the end of the matching columns to discourage thinking of these rules as merely pricing terms
  • Avoid confusion with Incoterms 2010

Delivered at Terminal (DAT) replaced with Delivered at Place Unloaded (DPU)
This is the only Incoterms 2020 rule that specifically tasks the seller with unloading. Obvious uses include unloading consolidated container load shipments, vessels at pier-side, air freight, as well as items requiring special handling and installation.

There is now an individual task line for insurance:
Of all aspects of trade, insurance is probably the least understood by those outside the industry itself. This is particularly true for international trade. Providing a separate task line gives it prominence which is now even more important.

The default insurance coverage level has been changed for CIP:
Recognizing that many shipments made under this omni modal rule are for relatively high value goods as opposed to commodities, the default has been switched from Institute Clauses C (American “Free of Particular Average”) to Clauses A (American almost “All Risk”). By the same reasoning, since CIF is frequently used for commodities, the default remains Clauses C. The option for the parties agreeing to reduce coverage for CIP, or increase it from CIF, has been included.

The introduction has been dramatically expanded:
For version 2020, the introduction has been rewritten in a clear user-friendly manner by the world’s foremost living expert, Charles Debattista. The short definitions found in the previous version were found inadequate and are replaced with explanatory comment. The guidance notes shown with each rule, now called Explanatory Notes, are more detailed and contain more illustrations.

Costs are more conveniently placed:
Costs items are now indicated in two places, both: next to the item from which they pertain and gathered together in A9-B9. In former versions they were placed on a blanket basis in A6-B6 and only with the item to which they pertain and could be overlooked.

Security Requirements are more clearly differentiated:
Security as an export/transit/import clearance issue is covered under Export/Import clearance (A7-B7). It is separately covered as a transportation-related issue under Carriage (A4-B4)

FCA and on-board bill of lading:
A possible solution between the FCA delivery point and a requirement for on-board marine transport document has been devised using the sales contract.

A new “horizontal” presentation has been introduced:
This feature allows readers to quickly track each task across the range of the eleven rules.

Provision is made for carriage by non-carriers:
The possibility of sellers and buyers performing transportation themselves without using outside carriers is now included by adding “or arrange” to contracting for carriage obligations. For example, sellers performing pre-carriage with their own trucks.