Incoterms® 2020 Accelerate Global Trade

The rules of the game for international transactions change, again

¿What happened?

En el marco del centenario de la creación de la Cámara de Comercio Internacional (ICC) los Incoterms® (acrónimo de “International Commercial Terms“), se rejuvenecen.

New Incoterms®2020 will entry into force next January 1st, 2020, replacing the previous 11 rules of last Incoterms® from 2010.

We take the opportunity to address the evolution of these rules and comment what will change with respect to Incoterms®2010 currently in place.

¿What is ICC?

The International Chamber of Commerce is an institution founded in Paris in 1919 with the aim to build common rules for the promotion of international commerce. For this purpose, it has created and routinely updated the commerce rules system called “Incoterms®”, in order to automatically regulate certain aspects of the international sales of goods, such as: transport modality, delivery, and distribution of obligations and risks among seller and buyer.

Incoterms® were firstly published in 1936: then there were 6 Incoterms®: FAS, FOB, C&F, CIF, Ex Ship, and Ex Quay. They have been modified in 7 occasions.

¿What are the Incoterms®?

Incoterms® consists of standardized clauses to be agreed upon between seller and buyer, and applicable anywhere, regardless of their country of origin.
Incoterms® are uniform rules, which summarizes the functioning of an international sale of goods.

They regulate the transport and delivery of goods, distribution of costs, and custom formalities.

The 7th edition currently in force is Incoterms®2010: composed of a total of 11 Incoterms® (EXW, FAS, FCA, FOB, CPT, CFR, CIP, CIF, DAT, DAP y DDP), they are split into 4 groups (E, F, C, and D). They can also be classified as polyvalent or multimodal ones: EXW, FCA, CPT, CIP, DAT, DAP y DDP; or maritime ones: FAS, FOB, CFR, and CIF.

¿What will change with Incoterms®2020?

Se ha introducido una nueva nomenclatura para DAT, que ahora se denominará DPU (Delivered at Place Unloaded), para esclarecer las dudas previas sobre su funcionamiento real – sin descarga.

Se han modificado los niveles de cobertura de seguros en CIF (Cost Insurance and Freight) y CIP (Carriage and Insurance Paid To).

Se ha permitido el transporte con medios propios en FCA, DAP (Delivered at Place), DPU y DDP.

Se ha introducido la mención al B/L (“Bills of Lading“) en FCA.

Additional resources are being dedicated to explain the functioning of Incoterms®, through illustrations, graphs, together with guidance and usage recommendations.

Se ha diseñado una aplicación de móvil para recibir noticias de actualidad, eventos y formación sobre los Incoterms®.

Se ha creado la ICC Academy con cursos especializados que permiten la obtención de un diploma: Incoterms 2020 Certificate.

The new Incoterms® has been prepared by a group of 9 experts from different parts of the world.

Contradiciendo los rumores, no se han eliminado ni modificado algunos Incoterms®2010: EXW (Ex Works), DDP (Delivered Duty Paid) o FCA (Free Carrier Alongside), seguirán pudiéndose aplicar.

Tampoco se ha creado el nuevo Incoterm CNI (Cost and Insurance), relativo al abono de impuestos.

¿What can be expected now?

New Incoterms®2020 may be applied from the beginning of January 2020 onwards. However, parties to a transaction could decide to continue applying Incoterms®2010 instead. We therefore recommend a gradual but steady adaptation to the new rules, since they are really simpler and easier to use.

¿How can we help you?

Gowper helps you choose the right Incoterm® so as to ensure a safe transition to the new 2020 rules. Furthermore, we offer a preventive protection to your business, since unless an explicit agreement is reached between the parties to the transaction, applicable laws and court jurisdiction in a dispute can be determined simply based on the delivery place according to the definition given by the selected Incoterm®.

Learn more about our offer of Individualized Solutions Plans (ISPs), in particular about our Orange Solutions, or about our wide range of sophisticated Services & Industries designed for helping business like yours thrive.

 

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