We update some changes of Incoterms 2020 and Details of Incoterms. However, you need to understand that the introduction of Incoterms 2020 does not mean that it replaces Incoterms 2010 or previous versions of Incoterms. Enterprises should choose Incoterms in accordance with the purchase and sale contract of the exporter and importer.
1.Some new points of Incoterms 2020
In the incoterms 2020 there are two main changes compared to the 2010 version, which is the addition of terms:
– DAT (Delivered at Terminal) will change its name to DPU (Delivered at Place Unloaded): Basically these two things are the same, but the ICC wants to emphasize and make clear the problem that “the seller must deliver” the goods to a certain point. predetermined destination (train station, port terminal, ICD, any point…), that is, to be responsible for unloading the goods from the means of transport to below the “ground” of the designated destination. This extends to DAT (delivery only to a certain port, train station), the point of delivery can be anywhere as agreed by the seller and the buyer.
For delivery under DPU, the seller must bear all costs, risks and liabilities, until the goods have been unloaded from the means of transport at the previously agreed point.
For insurance purchase, it will be agreed between the seller and the buyer.
For example: Delivery by Cat Lai DPU (full container goods – FCL), the seller needs to bear: Shipping fee from seller’s warehouse to Cat Lai port (domestic freight, local charge for first and foremost import, freight, freight). international shipping). Private insurance will be agreed between both parties.
– FCA (Free Carrier): The seller is exempt from liability when delivering the goods to the carrier (the carrier is designated by the buyer), this provision has a new point that the carrier is allowed to issue the bill of lading after receiving it. goods from the seller. Note: deliver the goods to the carrier, which means the responsibility and costs of loading the goods onto the transport vehicle.
Other changes of incoterms 2020 compared to the 2010 version of incoterms:
– CIF and CIP terms: “I” = insurance, the terms with the letter “I”, by default, the seller will have to buy insurance for the goods. For CIP terms, the default insurance type is type (A) or equivalent (A), previously according to incoterms 2010 the default insurance type for CIP conditions is type (C) – compulsory insurance . Particularly, CIF terms remain the same as incoterms 2010 – condition type (A) – all-risks insurance. The type of insurance will affect the high or low cost of insurance, so this is also a factor that the parties must consider carefully when signing a foreign trade contract.
– On the incoterms 2020 in section 9A/9B, the responsibilities and costs of the seller and the buyer are clearly listed.
– Terms: Free Carrier (FCA), Delivered at Place (DAP), Delivered at Place Unloaded (DPU) and Delivered Duty Paid (DDP), extended that the carrier is not necessarily a 3rd party , which may be shipped by either the buyer or the seller’s carrier.
– For the 2020 incoterms with additional regulations on information security, the parties must keep confidential information about goods, prices, and information related to the agreement between the parties in the contract.
EXW | Ex Works – Delivery at the factory
If the seller wants to export but cannot afford to do anything related to the shipment such as: customs clearance, transportation, insurance, etc. due to lack of export experience, it is recommended to sign a contract according to the article. EXW event. With this condition, the seller only needs to place an order at his factory, the buyer will pay for the goods (Invoice value) and send the goods away.
1.EXW means that the seller delivers the goods to the buyer when the goods are placed at the disposal of the buyer at a named place (factory or warehouse), and the named place may be the premises of the buyer. sell or not.
2.For delivery, the seller does not need to load the goods on the vehicle, nor do they need to clear the customs for export.
3. Delivery occurs – risk is transferred – when the goods are placed at the disposal of the buyer (not loaded on the vehicle).
4.EXW is an Incoterms condition that stipulates the minimum liability of the seller.
5.EXW is used with all modes of transport.
6.Delivery point = Named place: The delivery location is also the designated place.
FCA | Free Carrier – Delivered to the carrier
If the seller has the ability to carry out export customs procedures, for his convenience, the seller should accept this work (self-cost incurred is export tax) and propose to sign a contract under FCA terms. The seller usually estimates the payable export tax in advance and calculates it into the amount receivable from the buyer.
Summary:
1.FCA means that the seller delivers the goods to the buyer in one of two ways:
When the named place is the seller’s premises, the goods are delivered when they are loaded onto the means of transport arranged by the buyer or
When the named place is elsewhere, the goods are delivered upon completion of loading on the seller’s means of transport and to another named place and ready to be unloaded from the seller’s means of transport and placed at the disposal of the carrier or another person nominated by the buyer.
2.Whichever of the two places above is designated for delivery, that point determines where the costs and risks are transferred to the buyer.
3.FCA requires the seller to clear customs for export.
4.B/L note “on board” in contract of using FCA – To make the FCA condition feasible for sellers who need a B/L with “on board” notation, FCA of Incoterms 2020 The first time stipulates that if the two parties have agreed in the contract, the buyer must appoint the carrier to issue the B/L note “on board” to the seller.
5.FCA is used with all modes of transport.
6.Delivery point = Named place: The delivery location is also the designated place.
CPT | Carriage Paid To – Fees to be paid to
If the buyer wants to receive the goods under FCA terms but is unable to carry out the freight, he can negotiate and sign a contract under CPT terms. The seller usually anticipates the arising transportation costs and calculates them into the amount of goods receivable from the buyer.
Summary:
1.CPT means that the seller delivers the goods to the buyer – and transfers the risk of the goods to the buyer when:
The goods are delivered to the carrier hired by the seller or
The seller purchases such consignment for delivery to the buyer.
2. As soon as the goods are so delivered to the buyer, the seller does not guarantee that the goods will arrive at the destination in good condition and complete. The risk is transferred from the seller to the buyer when the goods are delivered to the buyer by handing over to the carrier.
3. The seller must contract for carriage to bring the goods from the point of delivery to the agreed destination.
4.CPT is used with all modes of transport.
5.Delivery point ≠ Named place: The delivery location is different from the specified location.
CIP | Carriage & Insurance Paid to – Fees and insurance paid up to
If the buyer wants to receive the goods as CPT, but also needs the seller to buy insurance for the shipment, then sign a contract with CIP. The seller buys insurance and bears the cost of insurance, but the buyer bears the risk of loss or damage of the shipment during transportation.
Summary:
1.CIP means that the seller delivers the goods to the buyer – and transfers the risk of the goods to the buyer when:
The goods are delivered to the carrier hired by the seller or
The seller purchases such consignment for delivery to the buyer.
2. As soon as the goods are so delivered to the buyer, the seller does not guarantee that the goods will arrive at the destination in good condition and complete. The risk is transferred from the seller to the buyer when the goods are delivered to the buyer by handing over to the carrier.
3. The seller must contract for carriage to bring the goods from the point of delivery to the agreed destination.
4. The seller must purchase insurance for the goods (insurance from the point of delivery to at least the destination).
5.CIP is used with all modes of transport.
6.Delivery point ≠ Named place: The delivery location is different from the specified location.
FAS | Free Alongside Ship – Delivery along the side of the ship
If the seller has more ability to bring the goods to the wharf at the port of export, the seller should do this (at his own expense and risk arising, calculate these costs in advance) and sign a contract. under the FAS condition.
Summary:
1.FAS means that the seller delivers the goods to the buyer when:
The goods are placed alongside the vessel named by the buyer at the named port of loading or
The seller purchases such consignment for delivery to the buyer.
2. The risk of loss of or damage to the goods is transferred when the goods are placed alongside the vessel, and the buyer bears all costs from that point on.
3.FAS requires the seller to clear export customs.
4.FAS is used with ocean freight.
5.Delivery point = Named place: The delivery location is also the designated place.
FOB | Free On Board – Delivery on board
If the seller has the additional ability to put the goods on board safely at the port of export, the seller should do this (at his own expense and risk, including this cost in advance) and contract according to FOB conditions.
Summary:
1.FOB means that the seller delivers the goods to the buyer when:
The goods are placed on the deck nominated by the buyer at the named port of loading or
The seller purchases such consignment for delivery to the buyer.
2. The risk of loss of or damage to the shipment passes when the goods are placed on board the vessel, and the buyer bears all costs from that point on.
3.FOB requires the seller to clear customs for export.
4.FOB is used with ocean freight.
5.Delivery point = Named place: The delivery location is also the designated place.
CFR/ CNF/ C+F/ C&F | Cost and Freight
If the seller has the ability to hire a ship, the seller should do this (at his own expense to hire a ship to bring the goods to the port of import, calculate this cost in advance – not bear any risks) and contract under CFR terms.
Summary:
1.CFR means that the seller delivers the goods to the buyer when:
Cargo is placed on deck or
The seller purchases such consignment for delivery to the buyer.
2. Risk of loss of or damage to the shipment passes when the goods are placed on board the ship, at which point the seller fulfills his obligation to deliver regardless of whether the goods arrive at the port of discharge in good condition and complete or not.
3. With CFR, the seller is not responsible for buying insurance for the goods, so the buyer has to buy the insurance himself.
4. The seller must contract for the carriage of the goods from the place of delivery to the named port of destination.
5.CFR is used with ocean freight.
6.Delivery point ≠ Named place: The delivery location is different from the specified location.
CIF | Cost, Insurance & Freight – Freight, insurance and freight
If the seller has the additional ability to buy insurance for the shipment when the goods are transported on board the ship, the seller should do this (at his own expense to buy insurance, calculate this cost in advance) and contract under CIF terms.
Summary:
1.CIF means that the seller delivers the goods to the buyer when:
Cargo is placed on deck or
The seller purchases such consignment for delivery to the buyer.
2. Risk of loss of or damage to the shipment passes when the goods are placed on board the ship, at which point the seller fulfills his obligation to deliver regardless of whether the goods arrive at the port of discharge in good condition and complete or not.
3. With CIF, the seller is responsible for purchasing insurance for the goods.
4. The seller must contract for the carriage of the goods from the place of delivery to the named port of destination.
5.CIF is used with ocean freight.
6.Delivery point ≠ Named place: The delivery location is different from the specified location.
DAP | Delivered At Place
If the buyer does not have the ability or experience to bring the goods to his/her country of import, the seller can do this extra work (calculate this cost in advance) and sign a contract under DAP terms.
Summary:
1.DAP means that the seller delivers the goods to the buyer – and transfers the risk of the goods to the buyer when the goods are placed at the disposal of the buyer on arriving means of transport ready for unloading at the destination. specified destination.
2. The seller bears all risks to bring the goods to the named place of destination. The risk of loss of or damage to the shipment passes to the buyer at the point of delivery.
3. All costs incurred before the point of delivery are borne by the seller and all costs after the point of delivery are borne by the buyer.
4. The seller must contract for carriage to bring the goods to the named place.
5.DAP is used with all modes of transport.
6.Delivery point = Named place: The delivery location is also the designated place.
DPU | Delivery at Place Unloaded – Delivered at the unloaded location
If the buyer does not have the ability or experience to bring the goods to the import warehouse and also does not have the ability or experience to unload the goods from the incoming means of transport, the seller may do this extra work (calculated in advance of the cost of the goods). this fee is included in the cost of goods) and contract under DPU terms.
Summary:
1.DPU means that the seller delivers the goods to the buyer – and transfers the risk of the goods to the buyer as soon as the goods are unloaded from the arriving means of transport and placed at the disposal of the buyer at the destination. specified destination.
2.Seller bears all risks of loss of or damage to the goods in order to bring the goods to the named destination and unload. DPU is the only Incoterms condition that requires the seller to unload the goods at destination (the seller bears the costs and risks of unloading).
3. All costs incurred before the point of delivery are borne by the seller and all costs after the point of delivery are borne by the buyer.
4. The seller must contract for carriage to bring the goods to the named place.
5.DPU is used with all modes of transport.
6.Delivery point = Named place: The delivery location is also the designated place.
DDP | Delivered Duty Paid
If the buyer does not have the ability or experience to do import customs clearance for the shipment, the seller can do this extra work (calculate the amount of import tax … payable in advance) and sign a contract under the terms of the contract. DDP condition.
Summary:
1.DDP means that the seller delivers the goods to the buyer when the goods have been cleared for importation and are placed at the disposal of the buyer on the arriving means of transport and are ready for unloading at the named destination. point.
2. The seller bears all risks of loss of or damage to the goods in order to bring the goods to the named destination.
3. All costs incurred before the point of delivery are borne by the seller (including the cost of customs clearance for import) and all costs after the point of delivery are borne by the buyer.
4. The seller must contract for carriage to bring the goods to the named place.
5.DDP is used with all modes of transport.
6.Delivery point = Named place: The delivery location is also the designated place.
