Comparing Incoterms 2010 and Incoterms 2020

There are many versions of Incoterms available. Which version to use for your trade terms? Comparing the Incoterms, are there differences?

Previously, we shared about Incoterms 2010. ICC last updated the Incoterms rules in September 2019. The Incoterms 2020 revision came into force on 1 January 2020.

In short, Incoterms help prevent confusion in foreign trade contracts by clarifying the obligations of buyers and sellers. It is globally recognized by all buyers and sellers. Incoterms help all to understand one another and the exact terms of their business arrangements. It was first developed in 1923 and updated periodically to conform to the changing trade practices with time.

Because the ICC regularly updates Incoterms, contracts should clearly specify which version they are using (e.g., Incoterms 2020). Do note that trade terms used in different countries may appear identical on the surface, but they can have different meanings when used domestically. Some Incoterms apply to any means of transportation, while others apply strictly to transportation across water. Buyers and sellers have their preferred Incoterms. The final agreed terms will set out all their obligations clearly. However, Incoterms do not cover everything.


Comparing Incoterms 2010 and Incoterms 2020

There are no significant differences in the various names of the two versions.

One clear change in the terminology is from DAT to DPU. Incoterms 2010, Delivered at Terminal (DAT) was clarified to Incoterm 2020, Delivered at Place Unloaded (DPU). This change means that delivery can happen anywhere not just at a transport terminal. This is the only rule where seller needs to unload the goods at their destination.

Freight insurance coverage required under the CIP term has been increased. However, this does not have an effect on the CIF term. CIF term is popular with commodities transactions where lower level of insurance coverage is widely accepted.

Incoterms 2020 covers situations where either the buyer or seller transports goods using their own vehicles. In Incoterms 2010, it was assumed that these services were provided by a third-party carrier. There is a change in the way that the FCA rule (Incoterms 2020) is used in conjunction with a letter of credit. The parties can agree that the buyer should instruct the carrier to issue the seller with a document confirming the actual loading of the goods.

In addition, there are changes to security-related cost responsibilities. These can be associated with export clearance processes as well as the import clearance process. The Incoterms revision clarified that the most common cost headings are those associated with transport that are the responsibility of the party who arranges this. Security costs associated with export clearance will be borne by the seller other than for EXW cases. Security costs associated with import will be borne by the buyer, except for DDP cases.


For more information, do check out the links below.


Know Your Incoterms

Comparing Incoterms 2020 and 2010

Incoterms Rules 2020

Incoterms rules

What Are Incoterms

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