Incoterms 2020: The Seven New Rules

International Commercial Terms are known as "Incoterms". Since 1980, it has been developing over the decades. The latest development from the International Chamber of Commerce (ICC) is declaring 2020 as a replacement for Incoterms 2010. Based on the data from Pusdiklat Bea Cukai, what has changed in Incoterms 2020?

Let's check it out!

Definition of terms

Definitions and introductory points for each term are clarified, this is very helpful for business actors (exporter/importer) in determining or choosing the right terms.

Addition of the FCA Clause

Incoterms 2020, especially the Free Carrier (FCA) term, provides an option that the buyer can ask the seller for instructions on providing documents related to the Bill of Lading (B / L) for the payment system process to the bank.

Cost Sharing 

The division of costs between exporter and importer is clarified and collected in points A9 or B9 of the respective terms. This clause as a one-stop-shop to finds all costs under given incoterms.

CIF Term Insurance Level

There is a change in the principle of insurance level at the CIF term. Previously, required sellers used the minimum insurance level or level (C), but among the newest change in Incoterms 2020 requires sellers to use the maximum insurance level or Institute Cargo Clause (A).

Carriage Arrangement for terms FCA, DPA, DPU & DPP

Due to term D that states the responsibilities and risks of the goods fall upon the seller, Incoterm 2020 now emphasizes that the seller has the right to arrange the contract of transportation to the transportation party. On the other hand, term F states that it is the buyer who has the right to arrange the contract of carriage to the transportation party.

Delivered at Place Unloaded (DPU)

Sixth, this is the most crucial point that has changed in incoterms 2020. Previously, the term Delivered at Place (DAT) had a broad meaning that often confused users. The change made to the term, which is now called Delivered at Place Unloaded (DPU), affirms that the seller has the responsibility to do the unloading, as long as the contract states so.

Security

Incoterms 2020 is stated in points A7 or B7, explaining that the responsibilities of the parties in terms of the transportation process also include security responsibilities.