Incoterms 2020
Incoterms (International Commercial Terms) are a set of standardized rules used in international trade that define the responsibilities of buyers and sellers in terms of the delivery, insurance, and risk management of goods. The International Chamber of Commerce (ICC) revises and updates these rules every 10 years to keep up with the changing business environment. The latest revision, Incoterms 2020, has been in use since 2020. In this blog, we will discuss the key changes and updates that come with Incoterms 2020.
Changes and Updates:
One of the major changes in Incoterms 2020 is the removal of the FCA (Free Carrier) rule’s requirement for the buyer to obtain a bill of lading from the carrier. This change reflects the increasing use of electronic documentation and makes the FCA rule more practical and easier to use.
Another significant change in Incoterms 2020 is the inclusion of new security-related requirements in the rules. The new rules require the parties to comply with all relevant security regulations and procedures, such as those relating to the transport of dangerous goods. This change reflects the increased focus on security in international trade and aims to ensure that buyers and sellers are aware of their responsibilities in this area.
Incoterms clarify the allocation of costs between buyers and sellers. For instance, the rules now make it clear that the seller is responsible for the costs of obtaining any necessary export licenses or permits, while the buyer is responsible for the costs of obtaining any necessary import licenses or permits.
Conclusion:
Incoterms 2020 brings several changes and updates to the international trade community. The removal of the FCA rule’s requirement for a bill of lading makes the rule more practical and easier to use. The inclusion of new security-related requirements reflects the increased focus on security in international trade. The clarification of cost allocation between buyers and sellers helps to reduce disputes and provide greater clarity and certainty in international trade. It is essential for businesses engaged in international trade to familiarize themselves with these changes. Businesses are then able to update their contracts accordingly to avoid any disputes or misunderstandings in the future.