Anyone who has experience in international shipping is probably already familiar with the various terms of transport. But what are the updated incoterms by 2020? What are they used for? We have prepared this article with up-to-date information on new terms for 2020, as well as a convenient introductory guide for those who are not yet familiar with this concept.
What are incotermins?
First, we must determine what incoterms are. Incoterms - short for international trade terms, is a series of terms created by the international chamber of commerce to define:
- How will the cargo be sent, when and where.
- Type of transport.
- Who assumes the risks and costs of transportation, including transportation costs, loading and unloading of cargo, and insurance.
- Who should pay for import or export duties.
The use of incotermins is not mandatory, but they help create a trade agreement based on standardized rules between sellers, buyers and forwarders in international transport. They were created in 1936 and were updated many times over the following years. Incoterms are usually updated every 10 years, taking into account the needs and characteristics of the logistics industry, so it is important to keep up with the changes and make sure that you are using the correct version. The latest update is called Incoterms 2020 and will be fully used from 2020.
Incoterms are divided into two main groups: multimodal and maritime transport. Multimodal incoterms are used when writing a contract for rail, road or air transportation. Since the nature of water transport is sometimes different, there are some additional incoterms created specifically for this type of transport.
Updated Incoterms 2020
Multimodal incoterms: for any type of transport
EXW: Additional work: The carrier is responsible for the proper packaging of the goods (usually in the warehouse or warehouse of the seller). The carrier is responsible for the goods for export and the organization of export and transportation. The carrier may also need help (customer) in the process of registration.
CPT: Payment for carriage: The supplier delivers the goods to the carrier and is responsible for paying the freight. The liability of the supplier ends when the goods are delivered, and from that moment the buyer assumes all risks.
CIP: Product insurance: The supplier delivers the goods to the carrier and is responsible for paying the freight and insurance coverage (at least 110% of the cost of the goods).
DPU: Delivered to the place of shipment: The responsibility for the goods lies with the supplier until they are delivered to their destination address. After this point, the buyer is responsible for them (including unloading them).
DDP: Obligations of the supplier: the supplier delivers the goods to the buyer, ready for unloading, with payment of all customs duties, taxes and import duties. The buyer is solely responsible for unloading the goods upon arrival.
Incotermins used for marine:
FAS: Payment for transportation: The supplier delivers the goods to the carrier and is responsible for paying the freight. The liability of the supplier ends when the goods are delivered, and from that moment the buyer assumes all risks.
