Falvey Cargo Updates


Posted: January 29, 2020 in:

As of January 1, 2020, the newest edition of Incoterms® from the International Chamber of Commerce (ICC) went into effect. While it will likely take some time for the new rules to be become the accepted standards, it’s important for everyone operating in the transportation industry to the changes included in the 2020 version. Below are the most important changes we wanted to bring to your attention.

What’s New In Incoterms 2020

Here are the most important changes to Incoterms for 2020. If your business uses any of these terms, we recommend updating your standard contracts accordingly.

  • Increased Insurance Coverage For CIP

In the Carriage and Insurance Paid To (CIP) term, the seller delivers to the carrier and pays for the carriage and insurance to the named destination. Incoterms 2010 only required the seller to obtain minimum insurance coverage (named perils per ICC (C) Clauses), but the 2020 version requires a higher level of coverage (All risks per ICC (A) Clauses). 

  • DPU Replaces DAT

Delivered at place unloaded (DPU) replaces the term delivered at terminal (DAT). This means that goods are considered delivered once unloaded at the named location on the buyer’s side, which may or may not be a terminal. 

  • Updated Language For Seller/Buyer Using Own Transport

The new language of “contract or arrange at its own cost for the carriage of the goods from the named place of delivery” has been added to increase clarity and accommodate sellers and buyers using their own transport. This revision has been made to correct the assumption in Incoterms 2010 that a third-party carrier would manage the transport of goods between sellers and buyers.

  • Added Flexibility For On-Board BOL Issuance 

Free Carrier (FCA) now allows the buyer to direct the carrier to issue an on-board bill of lading (BOL) to the seller. Until trade finance providers remove the requirement for an on-board BOL, this change in Incoterms 2020 is intended to equalize the cost and risk to the seller for container shipments. 

  • Expanded Details On Transport Security 

Transportation security requirements are more prominent in Incoterms 2020 in order to account for the increasing reality (and the associated risks and costs) of container screening. Incoterms 2010 only briefly covered transport security responsibilities and costs. 

  • Clarification of Costs

The cost allocations between sellers and buyers has been improved in all of the 2020 terms to include precise details about the financial obligations of each party. Generally speaking, any costs incurred up to the point of delivery are the responsibility of the seller, and costs beyond that are shouldered by the buyer.

What Are Incoterms

In brief, Incoterms are international trade terms that outline contractual obligations regarding the costs, risks, and responsibilities in the delivery of goods from sellers to buyers. Incoterms are revised every 10 years—the latest edition is Incoterms 2020.

Our blog postings on defining Incoterms will be able to help you familiarize yourself with the terms: EXW, FCA, CPT,  CIP, DAP, DPU, DDP, FAS, FOB, CFR, & CIF.

Check out this infographic to learn more about Incoterms in general, and why they’re important. To learn more or get a copy of Incoterms 2020, go to the ICC’s website. For details on how these revised rules might impact your cargo coverage, reach out to us.


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