Henning Harders - Cost effective, freight, customs, warehousing & logistic solutions. Flexible, customer focussed. From factory to end user. Henning Harders your trusted partner.

Incoterms®, Freight Forwarding Terms and Glossary

Incoterms® 2020 are pre-defined commercial terms by the International Chamber of Commerce (ICC). They are widely used in international commercial transactions or procurement processes. Incoterms® are the rules that define responsibilities of buyers and sellers in international trade. They provide guidance for determining how costs and risks are allocated to the parties. Incoterms® rules are regularly incorporated into contracts for the sale of goods worldwide and have become part of the daily language of trade.

The latest version, Incoterms® 2020 takes into account latest developments in commercial practice and will come into effect on 01.01.2020. 

Incoterms® is a registered trademark of the International Chamber of Commerce (ICC).

 

The two main categories of Incoterms® 2020 are organised by modes of transport. The aim is to clearly stipulate the obligations of buyers and sellers.

Group 1. Incoterms® that apply to any mode of transport are:

  • EXW Ex Works
  • FCA Free Carrier
  • CPT Carriage Paid To
  • CIP Carriage and Insurance Paid To
  • DAP Delivered at Place
  • DPU (new) Delivered at Place Unloaded
  • DDP Delivered Duty Paid

 

Group 2. Incoterms® that apply to sea and inland waterway transport only:

  • FAS Free Alongside Ship
  • FOB Free on Board
  • CFR Cost and Freight
  • CIF Cost, Insurance, and Freight

 

The most important changes from the previous Incoterms® 2010 are: 

DAT (Delivered at Terminal)  is changed to DPU (Delivered at Place Unloaded), which means that any (agreed) location can be the destination in the future and not only a “terminal”.


FCA (Free Carrier) now provides the additional option to make an on-board notation on the Bill of Lading prior loading of the goods on a vessel. Buyers and sellers can agree that the buyer instructs their carrier to issue the seller with an on-board bill of lading after loading the goods. At the same time, the seller is obliged to hand over this on-board bill of lading to the buyer. 


CIP now requires at least an insurance with the minimum cover of the Institute Cargo Clause (A) (All risk, subject to itemised exclusions).


CIF requires at least an insurance with the minimum cover of the Institute Cargo Clause (C) (Number of listed risks, subject to itemised exclusions).


Free Carrier (FCA), Delivered at Place (DAP), Delivered at Place Unloaded (DPU) and Delivered Duty Paid (DDP) now take into account that goods may be moved by using its own means of transportation, without engaging a third-party carrier.


The Incoterms® 2020 explicitly shifts the responsibility of security-related requirements and ancillary costs to the seller.

 

For further explanation of Incoterms® 2020 and specific advice please contact your Key Account Manager at Henning Harders.