New incoterms 2020

On 1 January 2020, the new Incoterms® 2020 entered into force. If agreed between trading parties, these terms set out the mutual obligations of the buyer and the seller with regard to the delivery of goods.

Apart from structural and visual enhancements to the Incoterms, such as more instructive pictures for each Incoterm, there are 6 important changes to take into account:

1. DPU (Delivered at Place Unloaded) replaces DAT (Delivered at Terminal) so that the delivery can now take place at any location; 
2. CIP (Carriage and Insurance Paid to) insurance coverage is extended and now obliges the seller to provide insurance for the buyer that is equivalent to Clause A (Institute Cargo Clauses);
3. Cost allocation between trading parties is now included in each Incoterm. General principle: the seller is responsible for the costs up to and including the moment of delivery; 
4. More elaborate security requirements in each Incoterm in order to meet the increased transport security requirements (e.g. compulsory container screening);
5. Possibility for the seller and buyer to arrange the transport themselves for Incoterms FCA – DAP- DPU and DDP.
6. Possibility within Incoterm FCA for seller to request that the buyer instruct the carrier to issue an onboard bill of lading. 

Given these important changes, it is time to check:

• which Incoterms your company uses in its (standard) contractual documents;
• whether your company uses the appropriate Incoterm for each respective delivery of goods; 
• whether the Incoterm(s) used still cover the previously envisaged responsibilities, risks and costs associated with the respective delivery of goods;
• whether the Incoterm(s) used conflict with any other contractual provisions governing the sale of goods.