As we break into summer, a lot is concentrating our minds at GBN.
New Incoterms 2020
The international trade community are waiting in anticipation as a committee from the International Chamber of Commerce (ICC), which now for the first time includes China and Australia, are discussing changes for the next revision of Incoterms 2020.
What are Incoterms?
Incoterms (short for international commercial terms) are a set of standards, terms, and conditions that help the sale of physical goods that need to be moved from seller to buyer (for example, between exporters and importers).
Incoterms provides clarity and predictability to businesses, thereby facilitating trillions of dollars worth of global trade annually.
They were first launched in 1936 by the ICC and have been updated eight times to mirror the increasing complexity of growing global trade.
To apply Incoterms rules, two key areas of a transaction are important:
- Which party – buyer or seller – is responsible for arranging and paying for transport (and associated activities such as loading or unloading), import and export procedures, insuring the goods etc. and,
- At what point in the journey does the responsibility for the consignment transfer from seller to buyer? This becomes important if the goods are lost or damaged in transit.
New Rules 2020
This September, the revised Incoterm 2020 will appear and be enforced from 1 January 2020.
According to available information, the areas of possible amendments include:
- Removal of FAS (Free Alongside Ship) and replaced with FCA (Free Carrier Alongside).
- Expansion of FCA (Free Carrier Alongside), and the division of FCA into two categories for land and maritime deliveries.
- Removal of EXW (Ex Works) because of misuse by domestic sellers although the rules were developed for international trades.
- DDP (Delivered Duty Paid) may be split into two to help clarify who pays customs duties.
- DTP (Delivered at Terminal Paid)
- DPP (Delivered at Place Paid)
As global trade continues to develop, the Incoterms developments will seek to bring about new solutions that will sustain the growth of trust and reliability amongst market participants. The ICC review will bring benefits that will continue to maximize future value chains and supply chains.
Freepik. Background photo created by xb100