The latest revision of the Incoterms® Rules comes into effect on 1st January next year. While changes have been made in the way and the sequence in which Sellers’ and Buyers’ obligations are listed, the Incoterms® remain largely unchanged.
Some of the major changes introduced with the 2020 revision are:
·DAT (Delivered at Terminal) renamed DPU (Delivered at Place Unloaded)
·The sequence in which Incoterms® are listed has changed, with DAP now preceding DPU instead of following it.
·Under the CIP term (Carriage and Insurance Paid To) sellers must now obtain insurance cover for Institute Cargo Clauses (A) or equivalent instead of Institute Cargo Clauses (C). The requirement under CIF (Cost Insurance and Freight) remains unchanged at Institute Cargo Clauses (C). The minimum amount for which insurance is required remains unchanged at contract price plus 10% for both terms.
·Restatement and realignment of both Seller and Buyer obligations under each Incoterm®.
Other changes include clarity on the responsibility for security costs incurred in the supply chain, provision for multiple transport contracts and contractors to be involved in a single shipment, as well as provision for sellers to arrange their own transport for deliveries instead of contracting this function to a carrier. This last point is most likely to apply to domestic or regional deliveries.
We remind clients that all previous versions of the Incoterms® rules remain valid, provided their use is agreed by the seller/buyer concerned and that the version (year) is included in the written contract. If no version is stated, the latest effective version applies by default.