Like every decade, the International Chamber of Commerce (ICC) has updated the International Trade Terms, known as Incoterms, (International commercial terms), this is the eleventh modernization of the terms, in order to adapt them to the market of today and ensure its usability.
Incoterms, first produced in 1936 by the ICC, are a series of terms and conditions that must be met in an international sale. They help to manage and stipulate the details of the transaction, such as when and where the transfer of risk occurs, who assumes the obligation of costs, etc. In a sector so closely linked to international trade such as industrial, these terms represent a basic and necessary tool.
Since January 1, 2020, the 2020 incoterms have come into effect. However, revisions from previous years (1945, 1953, 1967, 1976, 1980, 1990, 2000, 2010) are still valid. That is why whenever we mention an incoterm, it must be accompanied by the year of update to which we are referring specifically. For example, DAT 2010 or DAT 2020. In this way, everyone can know which terms or modifications of each incoterm we are dealing with.
There are 11 incoterms that exist to date, classified into four groups, depending on their terms: EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAT, DAP and DDP.
Although there are eleven incoterms in total, there are only four that have undergone a modification in the last update of 2020:
Which means, the insurance of the new CIF and CIP have to cover until the merchandise arrives at the destination port. "They cover fires, explosions, collisions, collisions, overturning, derailments, general average sacrifice and eventual contributions, wave dragging, salvage expenses," according to the ICC-A clause of the International Underwritting Association of London.
On the other hand, the 2020 incoterms have added other novelties of general aspects. These are:
It is important to keep these terms in mind, especially in sectors such as industrial or commercial. With all these modifications, the ICC ensures that Incoterms will continue to be the terms through which international trade will be governed, as has been the case since its creation in 1936.