Do you know your FCA from your FOB or CFR from CIF? If not, then look no further! Trust in PG Paper to be your one stop shop for everything you need to know about Incoterms 2020 – what’s in, what’s out and more importantly, what it means for your orders in 2020 and beyond.
Incoterms have been around for 100 years in both international and domestic sales contracts and help reduce any misunderstandings by clearly setting out the responsibilities of both the buyer and the seller and the point at which the transfer of risk occurs.
You have probably heard a lot of discussion about the “big changes that are coming” but you may or may not know that these new terms went live on 1st January 2020 and all new transactions should now be following these updated terms.
Now, looking only at the abbreviations, it may not be immediately obvious that there has been anything changed at all (unless you memorized all 11 from Incoterms 2010 of course!) so here’s a quick overview of what’s new and any terms that no longer exist:
- For those of you with an eagle eye, the most obvious change is the renaming of Delivered at Terminal (DAT) to DPU (Delivered at Place Unloaded) The main reason for this is that a “Terminal” isn’t always where the buyer and/or seller want the goods to be delivered so DPU now allows for this flexibility.
- CIP (Carriage & Insurance Paid To) and CIF (Cost, Insurance & Freight) are now more defined with different levels of insurance coverage required for export. There are no changes to seller requirements for CIF in which only the minimum coverage is required under Clause A of the Institute Cargo Clauses but for CIP, at least 110% of the value of the goods must now be covered by the seller under Clause C of the Institute Cargo Clauses.
- Some changes have also been made to the requirements of the term FCA (Free Carrier) in which the buyer must arrange for the carriage of goods at their own cost and risk. The seller is then responsible for loading the goods on to the transport provided.
So, really the big question now is what impact this has for PG Paper and its customers?
The answer is quite simple in that we don’t envisage it to have much impact on how we are working. Our team have been aware of these changes in Incoterms and are knowledgeable in any deviation in our responsibility both as a buyer and a seller. We can assure that our trusty team all over the world will keep you right!
