Incoterms® 2020

How To Use Incoterms® Effectively – A Guide for Exporters

by Tim Hiscock • 28 June 2024
Some exporters mistakenly perceive Incoterms® as mere jargon, a three-letter abbreviation that gets written into contracts and then appears on invoices and Customs declarations. However, mastering the use of Incoterms® can empower exporters, enabling them to save money, minimise delays, and enhance customer satisfaction.

Unlock the Power of Incoterms® to Drive More Business

by Tim Hiscock • 27 June 2024
Imagine a tool that could bring clarity and legal protection to your sales contract. That’s the power of Incoterms®. When both parties agree to an Incoterm®, they are bound by the obligations in the published rules, providing a solid foundation for your business transactions.
The Global Misuse of Incoterms®

The Global Misuse of Incoterms®

by Jon Walden - Associate of Strong & Herd LLP • 29 June 2022
This is not a new topic and, of course, that is the big frustration – despite Incoterms® reviews every decade there is still a huge problem, globally, with the misuse of Incoterms®.
Risk and Incoterms

Risk and Incoterms

by Steve Berry • 7 April 2022
International Trade can be complex, Incoterms are not a mandatory requirement to be included in a sales contract. If a rule is applied it is important that it is used correctly and both parties understand their obligations, costs and risks.
Collecting Ex-Works from the EU and the UCC Definition of an Exporter

Collecting Ex-Works from the EU and the UCC Definition of an Exporter

by Emmanuel Gianquitto • 8 December 2021
Collecting Ex-Works from the EU and the UCC Definition of an Exporter, ICC Incoterms® 2020 Rules

FAQ's

  • Do all Incoterms have to show Incoterms (R) 2020 after them?

    When showing an Incoterms® rule in a contract or on a shipping invoice you must show the applicable year and it is recommended to show the registered trademark but the ICC seem to have softened their stance on this for companies so don’t worry if you can’t show the ® sign. The ® is aimed at companies like us who do training, prepare documents and write about the terms for the general public to make sure we let people know registered by the ICC.

  • One of our clients attended a recent Incoterms® 2020 Seminar and has got the impression they can only use the term FOB for conventional (break bulk) ocean cargo ie non containerized. As this will have a big impact on them, they have asked me to check it out with you because, basically, our client would prefer to continue to us the term FOB for containers.

    Incoterms® 2020 Rules is still following the usual rules that FOB, along with FAS, CFR and CIF are only appropriate for conventional sea freight. This isn’t new. The introduction to the new set of term says that “the FOB rule is not appropriate where goods are handed over to the carrier before they are on board the vessel.” This means that if the goods are handed over to a carrier at a container terminal, for loading into a container prior to that being loaded on a ship FOB is inappropriate and the FCA will be more appropriate… 

  • Does the new Incoterms ® 2020 rules make it clear whether a seller must pay import VAT if they sell DDP or is it still vague?

    Yes, under DDP the seller is responsible for all customs duties and taxes applicable to the goods on arrival into the country; if a customs authorities charges VAT at import then the seller has to pay it – unless the contract states specifically that the delivery term is “DDP named place of destination local taxes (VAT) excluded Incoterms® 2020”. The use of DDP as a delivery term has never been recommended and we are beginning to see some new problems for traders using this term. To sell correctly under DDP terms the seller must be able to be the importer of record in the destination country; to do this they must be registered as an importer with the customs authorities, be registered to pay local taxes and apply with the increased cargo security regulations. Where, in the past, many freight companies got around this in one way or another – sometimes incorrectly using the buyer’s registrations to get things cleared through customs, perhaps without the buyer knowing they were – the emphasis on security controls and customs liabilities is making this harder for them to do. 

  • What happens to orders which were entered on to our business system before 1st January 2020 that will have obsolete Incoterms® rules, (for example DAT)? Will Customs in the country of arrival automatically apply the corresponding replacement code from the 2020 Incoterms® set of rules or will they assume that we are still using the old terms? Is there a "honeymoon" period to allow time for orders showing old Incoterms to be shipped? If so, how long is it?

    Incoterms 2010 and DAT terms have not become obsolete from 1/1/2020. 1st January 2020 is the date the new set of International Commercial Terms (Incoterms® 2020 Rules) became effected. Contracts remain covered by Incoterms 2010 until the contracts have been formally amended to be covered by Incoterms 2020 – this happened with the 2000 set and earlier sets; in fact, old Incoterms® never die. If a company decides to continue using Incoterms 2010 indefinitely then they are still recognisable terms worldwide and though, in time, they will appear old fashioned (like the 1980 Incoterm FOT does) the definitions will remain in the legal statute books. Customs have nothing to do with the Incoterms® Rules – they must accept whichever term is used whether old or new. The Incoterms® contract terms are essentially the term agreed between the seller and buyer

  • A customer buys under FCA seller’s premises and arranges for a freight forwarder to drop off a sea freight container for loading. As the seller what are our responsibilities?

    Under FCA it is the seller’s responsibility to load the container. Once safely stowed get a signature from the driver declaring there is no damage, and this is the end of the seller’s risk. You do need to ensure an export customs declaration is completed in your name and obtain and permits or licences that allow the goods to leave the UK so there may be additional costs to consider.

  • We cannot find anything in Incoterms 2020 which indicates how and when we will be paid. Where is this information to be found?

    How and when you get paid has nothing to do with the Incoterms ® Rules, and never has. Within the introduction to the Incoterms® 2020 rules, Section II covers “What Incoterms® Rules do not do”. Point 7. 3rd bullet state that Incoterms® rule do not establish: “the time, place, method or currency of payment of the price”. The Incoterms ® Rules only define the point of legal delivery of the goods and when the risk of loss or damage passes from the seller to the buyer and costs related to these actions