Incoterms 2020 and the new rules:
Because of the need to determine responsibilities, the buying and selling of goods in the international trading system can often become complicated, costly, and risky for all parties.
To facilitate commercial import and export, the International Chamber of Commerce (ICC) introduced International Commercial Terms (Incoterms®), which represent the essential terms of world trade for the sale of goods. These regulations have become part of our daily language of trade and exist to guide us whether we are filling out an order form, packing a shipment, or preparing a certificate of origin.
The IIC has maintained and developed them since the rules were first published in 1936. In order for companies to be prepared for the next century of global trade, the latest edition – Incoterms® 2020 – which went into effect on January 1, 2020 should be referenced as of this date.
Incoterms® rules present a series of three-letter business terms that have very precise meanings for the sale of goods around the world.
Rules for any mode of transportation:
DESCRIPTION
OBLIGATIONS
Ex Works (local de entrega designado)
EXW means that the seller makes the goods available at his premises or at another location such as a workshop, factory, warehouse, etc., and is sometimes used when making an initial quotation for the sale of goods without any costs included. The seller does not need to load the goods on any collection vehicle, nor does he need to clear the goods for export.
Free Carrier (local de entrega designado)
With two different meanings, the FCA rule can mean two different levels of risk and cost for the buyer and the seller. FCA rule (a) is used when the seller delivers the goods, cleared for export, to a named place on his own premises. FCA rule (b) is used when the seller delivers the goods, cleared for export, to a named place outside his own premises. In both cases, the goods may be delivered to a carrier nominated by the buyer, or to another party nominated by the buyer.
Carriage Paid To (local de destino designado)
The seller pays for the transportation of the goods to the designated place of destination.
Carriage and Insurance Paid to (local de destino designado).
Similar to the CPT rule, except that the seller is required to obtain minimum insurance for the goods while they are in transit.
Delivered at Place (local de destino designado)
The seller is considered to have completed delivery when the goods are placed at the disposal of the buyer on the arriving means of transport and are ready for unloading at the named place of destination. Under the DAP rule, the seller needs to manage all risks involved up to and including the arrival of the goods.
Delivered at Place Unloaded (local de destino designado)
This Incoterm requires the seller to deliver the goods, unloaded, to the named place. The seller covers all transport costs (export taxes, transport, unloading from the main carrier at destination, general and destination port charges) and bears all risks up to arrival at the place of destination.
Delivered Duty Paid (local de destino designado)
The seller is responsible for delivering the goods to the named place in the buyer's country and pays all costs of bringing the goods to destination, including import duties and taxes. The seller is not responsible for unloading.
Rules for shipping and inland waterways:
DESCRIPTION
MAIN OBLIGATIONS TO BE BORNE BY THE SELLER
Free Alongside Ship (porto de envio designado)
The seller is considered to have completed delivery when the goods are placed alongside the vessel (e.g. on a quay or barge) indicated by the buyer at the named port of shipment. The risk of loss or damage of the goods passes from the seller to the buyer when the goods are alongside the vessel, and the buyer assumes responsibility for all costs from that moment.
Free on Board
The seller delivers the goods on board the vessel nominated by the buyer at the designated port of shipment or acquires the goods already delivered in this mode. The risk of loss or damage of the goods passes from the seller to the buyer when the goods are on board the vessel, and the buyer assumes responsibility for all costs from that moment.
Cost and Freight
The seller delivers the goods on board the vessel. The risk of loss of or damage to the goods passes from the seller to the buyer when the goods are on board the vessel. The seller must contract and pay the costs and freight necessary to bring the goods to the named port of destination.
Cost, Insurance and Freight
Similar to the CFR, but the seller must also additionally obtain minimum insurance coverage against the buyer's risk of loss or damage to the goods during transportation.
Unlike Incoterms® 2010, the Incoterms® FCA (Free Carrier) rule now offers the additional option of making a notation on board the bill of lading before loading the goods onto a vessel. Costs now appear centrally in sections A9/B9 of each Incoterms® rule.
The CIP rule now requires at least insurance with the Institute’s minimum Cargo Clause (A) coverage (all risks, subject to detailed exclusions).
The CIF rule requires at least insurance with the minimum coverage of the Institute’s Cargo Clause (C) (number of risks listed, subject to detailed exclusions).
Now, the Free Carrier (FCA), Delivered at Place (DAP), Delivered at Place Unloaded (DPU) and Delivered Duty Paid (DDP) rules of the Incoterms® take into account that the goods can be transported without hiring a third party carrier, namely by using your own means of transport.
The Delivered at Terminal (DAT) rule has been changed to Delivered at Place Unloaded (DPU) to clarify that the destination location can be any location, not just a “terminal”.
Now, Incoterms® 2020 explicitly shifts the responsibility for requirements related to security in high-value transport and ancillary costs to the seller.
If no year is indicated in the Incoterms®, the following applies:
Until December 31, 2019, Incoterms® 2010 applies.
As of January 1, 2020, Incoterms® 2020 applies.
Ports around the world:
SOUTH AFRICA – Cape Town, Durban, East London, Port Elizabeth.
GERMANY – Bremen, Hamburg, Wismar, Bremerhaven.
ANGOLA – Cabinda, Lobito, Luanda, Namibe.
ANTIGUA – St. John’s.
ANTILLES – Castries, Kingstown, Montserrat, St. Barthéemy, St. Kitts, St. Martin, St. Vincent.
NETHERLANDS – Aruba, Willemstad.
SAUDI ARABIA – Dammam, Jeddah.
ALGERIA – Algiers, Mostaganem, Oran.
ARGENTINA – Buenos Aires, Campana, Rosario.
AUSTRALIA – Adelaide, Brisbane, Fremantle, Melboume, Sydney.
AZORES – Angra.
BAHAMAS – Freeport, Nassau.
BANGLADESH – Chittagong, Chalva.
BAHRAIN – Bahrain.
BARBADOS – Bridgetown.
BELGIUM – Antwerp, Ghent.
BELIZE – Belize.
BENIN – Cotonou.
BERMUDA – Hamilton.
BRAZIL – Angra dos Reis/RJ, Antonina/PR, Aracajú/SE, Aratu/BA, Barra do Riacho/ES, Belém/PA, Cabedelo/PB, Cubatãc/SP, Forno/RJ, Fortaleza/CE, Ihéus/BA, Itaguaí/RJ, Imbituba/SC, Itajaí/SC, Itaqui/MA, Madeira/MA, Macapá/AP, Maceié/AL, Madre de Deus/BA, Manaus/AM, Natal/RN, Niterói/RJ, Paranaguá/PR, Pecém/CE, Pelotas/RS, Ponta do Santarém/PA, Rio Grande/RS, Santos/SP, São Luiz/MA, São Francisco do Sul/SC, São Sebastião/SP, Suape/PE, Tubarão/ES, Vila do Conde/PA, Vitória/ES.
CAPE VERDE – Mindelo, Praia.
CAMEROON – Douala.
CANADA – Halifax, Hamilton, Montreal, St. John’s, Toronto, Vancouver.
CHILE – Antofagasta, Arica, Bahia Concepcion, Iquique, Punta Arenas, San Antonio, Talcahuano, Valparaiso.
CHINA – Dalian, Guangzhou, Hangpu, Macau, Quingdao, Shangai, Tianjin, Xingang.
CYPRUS – Lamaca, Limassol.
COLOMBIA – Barranquilla, Buenaventura, Cartagena, Santa Marta.
CONGO – Point Noire.
SOUTH KOREA – Busan.
IVORY COAST – Abidjan.
COSTA RICA – Puerto Limon, Puerto Caldeira.
CROATIA – Rijeka.
CUBA – Havana.
DENMARK – Aarhus, Copenhagen, Koge.
DJIBOUTI – Djibouti.
EL SALVADOR – San Salvador.
EGYPT – Alexandria, Port Said.
UNITED ARAB EMIRATES – Abu Dhabi, Dubai, Sharjah.
ECUADOR – Esmeraldas, Guayaquil.
SPAIN – Algeciras, Alicante, Barcelona, Bilbao, Cadiz, Pasajes, Valencia, Vigo.
SLOVENIA – Koper.
UNITED STATES – Baltimore, Boston, Brownsville, Charleston, Chicago, Galveston, Houston, Jacksonville, Long Beach, Los Angeles, Miami, Mobile, New Haven, New Orleans, New York, Norfolk, Oakland, Philadelphia, Port Everglades, Portland, San Francisco, Savannah, Seatlle, Tacoma, Tampa, Wilmington.
PHILIPPINES – Manila.
FINLAND – Helsinki.
FRANCE – Le Havre, Marseilles, Sete, Lorient, Montoir.
GABON – Libreville.
GHANA – Theme.
GREECE – Eleusis, Piraeus, Salonica, Volos.
GRENADA – St. George’s, Grenada.
GUADALOUPE – Point a Pitre.
GUATEMALA – Puerto Quetzal, Sto. Tomas de Castilla.
GUINEA BISSAU – Bissau.
GUINEA – Conakry.
GUYANA – Georgetown.
HAITI – Port au Prince.
HOLLAND – Amsterdam, Fhushing, Rotterdam.
HONDURAS – Puerto Cortes.
HONG KONG – Hong Kong.
YEMEN – Aden, Hodeidah.
CANARY ISLANDS – Las Palmas, Sta. Tenerife Cross.
FIJI ISLANDS – Suva.
MAURITIUS ISLANDS – Port Louis.
SALOMON ISLANDS – Honiera, Kieta.
VIRGIN ISLANDS – St. Croix, St. John, St. Thomas Tortola.
INDIA – Calcutta, Cochin, Madras, Mumbai.
INDONESIA – Jakarta, Surabaya.
ENGLAND – Cardiff, Felixtowe, Hull, Liverpool, London, Manchester, Portsmouth, Tilbury.
IRAN – Abbas, Bandar, Khomeini.
IRAQ – Basrah, Umm Qasr.
IRELAND – Dublin.
ICELAND – Reykjavik.
ISRAEL – Ashdod, Haifa.
ITALY – Genoa, Livorno, Naples, Salermo, Trieste, Venice, Ravenna, Savona.
JAMAICA – Kingston.
JAPAN – Kobe, Nagoya, Osaka, Tokyo, Yokohama.
JORDAN – Aqaba.
KENIA – Mombasa.
KUWAIT – Kuwait.
LEBANON – Beirut.
LIBERIA – Monrovia.
LIBYA – Tripoli.
MALAYSIA – Penang, Port Kelang, Kota Kinabalu.
MALTA – Malta.
MOROCCO – Casablanca.
MARTINIQUE – Fort de France.
MAURITANIA – Nouadhibou, Nouakchott.
MEXICO – Altamira, Tampico, Veracruz, Manzanillo.
MOZAMBIQUE – Beira, Maputo.
NEW CALEDONIA – Noumea.
NIGERIA – Lagos.
NORWAY – Bergen, Oslo, Stavanger.
NEW ZEALAND – Auckland, Tauranga.
NICARAGUA – Corinth, Managua.
OMAM – Muscat.
PANAMA – Balboa, Cristobal, Manzanillo.
PAPUA NEW GUINEA – Port Moresby, Lae.
PAKISTAN – Karachi.
PERU – Callao, Chimbote, Matarani.
POLAND – Gdynia.
PUERTO RICO – San Juan.
PORTUGAL – Leixões, Lisbon.
QATAR – Doha.
DOMINICAN REPUBLIC – Rio Haina, Santo Domingo.
ROMANIA – Constanza.
RUSSIA – Saint Petersburg.
SENEGAL – Dakar.
SIERRA LEONE – Freetown.
SERVIA AND MONTENEGRO – Bar.
SINGAPORE – Singapore.
SIRIA – Latakia, Tartous.
SOMALIA – Mogadishu.
SRI LANKA – Columbus.
SUDAN – Port Sudan.
SWEDEN – Gothenburg, Helsingborg, Malmoe, Stockholm.
SAINT LUCIA – St. Lucia.
SURINAME – Paramaribo.
TAHITI – Papeete.
THAILAND – Bangkok, Laem Chabang.
TAIWAN – Kaoshiung, Keelung, Taichung.
TANZANIA – Dar es-Salaam.
TOGO – Lome.
TRINIDAD AND TOBAGO – Port of Spain.
TUNISIA – Tunis.
TURKEY – Derince, Iskenderum, Istanbul, Izmir, Mersin.
URUGUAY – Montevideo.
VENEZUELA – La Guaira, Maracaibo, Puerto Cabello, Valencia, Guanta, El Guamache.
VIETNAM – Haiphong, Ho Chi Minn.
ZAIRE – Matadi.
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