Have new INCOTERMS been announced?
Let’s be clear from the offset, the ICC have not formally announced what any changes to Incoterms will be and the following information is speculation, albeit what we believe to be accurate, based on information coming in that holds up under scrutiny. As soon as the ICC have released the set of Incoterms, we will follow up with updated information and update our Incoterm guide accordingly. This new set of Incoterms is also expected to be easier to understand and further eliminate misunderstanding when it comes to international trade. That being said, you need not worry about any confusion as Banks & Lloyd are on hand to keep things simple!
Hang on, what are Incoterms?
ICC Incoterm rules are globally recognised trade terms to help pinpoint who is responsible for what in an international transaction. For example, you may hear something like “let’s work on the basis of Incoterm FCA” or “we can work on DAP” … but these acronyms are as good as an alien language for those unfamiliar with them, and even when expanded they can remain confusing at best. We have a handy guide on the current set of in use Incoterms for 2019, which have been in use since Incoterms 2010 were introduced. So, if you are completely unfamiliar with Incoterms why not take a minute and have a glance. Or if you want to ‘skip to the end’ and get on with your day, just speak to one of our team members who can help guide you to what you need!
When will the new Incoterms 2020 come into play?
The start of next year (and the next decade! How time flies) 01/01/2020
So, what can we expect from Incoterms in 2020?
Various changes are likely to come in, with some new rules introduced, some old rules put out to pasture and other rules tinkered with. See below…
Incoterms to be removed
Incoterms we’re expecting to be removed altogether are FAS and EXW. The removal of EXW is being justified by the fact that it seems to be more in play with domestic trade and is at odds with the EU’s new customs code, whereas FAS is rarely used and its similarity to FCA makes it superfluous.
Incoterms to split
- DTP (Delivery at terminal paid) – In this case the seller will be responsible for all transport related costs, including customs duties, when goods are delivered to a terminal (e.g. a port)
- DPP (Delivered at paid place) – In this case the seller will be responsible for all transport related costs including customs duties when goods are delivered to any a place that isn’t a transport terminal (e.g. a final delivery address)
Another Incoterm set to be split is FCA, where the new ones will be introduced to specify between land transportation and sea transportation.
2020 should see the introduction CNI (Cost and Insurance) which sees the seller have responsibility of adding insurance to the cargo from the departure port but the buyer has responsibility and risk of transportation.
Now having a slight better idea of what to expect to see from Incoterms in 2020, we should keep in mind that differences in the final release by the ICC could happen, and as we advised above, we will give a full update once the final information has been released.
If you’re finding Incoterms all rather baffling, then simply get in touch with your freight requirements and we can figure out all the finer details for you!