Freight Incoterms (International Commercial Terms) are standardized terms used in sales contracts for importing and exporting goods.
They define the responsibility and liability for goods throughout the shipment process.
Incoterms specify when responsibility for the goods transfers from the supplier to the buyer and who bears the costs associated with the goods and their transport.
2. Differences Between Incoterms® 2010 and Incoterms® 2020
Main Updates in 2020:
Introduction of the new DPU term (Delivered at Place Unloaded) replacing DAT (Delivered at Terminal).
Clarifications and updates to better reflect modern trade practices and technology.
3. Some Key Incoterms
EXW (Ex Works): Seller makes goods available at their premises; the buyer assumes responsibility for transportation and all costs after pickup.
FCA (Free Carrier): Seller delivers goods to a named place (usually a terminal or warehouse), and risk transfers to the buyer once goods are handed over to the carrier.
CPT (Carriage Paid To): Seller covers transport costs to a named destination, with risk transferring to the buyer upon delivery.
CIP (Carriage And Insurance Paid To): Similar to CPT, but the seller also provides insurance for the goods during transit.
DAP (Delivered At Place): Seller arranges the entire shipment to a named place, with risk transferring to the buyer upon delivery.
DPU (Delivered At Place Unloaded): Seller delivers and unloads the goods at a named place; risk transfers to the buyer after unloading.
DDP (Delivered Duty Paid): Seller is responsible for the entire shipment, including customs clearance and fees, delivering directly to the buyer’s premises.
FAS (Free Alongside Ship): Seller delivers goods alongside a ship at the port; risk transfers to the buyer once goods are alongside the ship.
FOB (Free On Board): Seller loads goods onto a vessel at the port; risk transfers to the buyer once the goods are on board.
CFR (Cost And Freight): Seller covers costs to transport goods to the destination port, but risk transfers to the buyer once goods are on board at the origin port.
CIF (Cost, Insurance, and Freight): Similar to CFR, but the seller also provides insurance for the goods during transit to the destination port.
4. 2020 Incoterms Rules for Any Mode of Transport
The following Incoterms can be used for both ocean and air shipping:
EXW – Ex Works
FCA – Free Carrier
CPT – Carriage Paid To
CIP – Carriage and Insurance Paid To
DAP – Delivered At Place
DPU – Delivered At Place Unloaded
DDP – Delivered Duty Paid
5. 2020 Incoterms for Sea and Inland Waterway Transport
The following Incoterms are specific to sea and inland waterway shipments:
FAS – Free Alongside Ship
FOB – Free On Board
CFR – Cost and Freight
CIF – Cost, Insurance, and Freight
6. 2010 Incoterms
The International Chamber of Commerce (ICC) updates Incoterms every ten years or so.
The 2010 Incoterms were largely similar to the 2020 version, with some changes and clarifications made in 2020 to better reflect modern trade practices and technology.
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