INCOTERMS 2020

Incoterms are internationally recognized rules describing who is responsible for goods in transit and for how long. By using Incoterms can sellers and buyers avoid unnecessary misunderstandings. Incoterms 2020 are recognized by the authorities and courts around the world

The Incoterms rules are the world’s essential terms of trade for the sale of goods. Whether you are filing a purchase order, packaging and labelling a shipment for freight transport, or preparing a certificate of origin at a port, the Incoterms rules are there to guide you. The Incoterms rules provide specific guidance to individuals participating in the import and export of global trade on a daily basis

What does “Incoterms” stand for?

“Incoterms” is an acronym standing for international commercial terms. “Incoterms” is a trademark of the International Chamber of Commerce, registered in several countries

The Incoterms rules feature abbreviations for terms, like FOB (“Free on Board”), DAP (“Delivered at Place”) EXW (“Ex Works”), CIP (“Carriage and Insurance Paid To”), which all have very precise meanings for the sale of goods around the world

These terms hold universal meaning for buyers and sellers around the world. If you are a financial analyst in the City of London, then you might associate the acronym “FCA” with the United Kingdom’s Financial Conduct Authority. However, for importers and exporters around the world, FCA is the initials used for “Free Carrier,” or the seller’s obligation to deliver the goods to the carrier nominated by the buyer at the seller’s premises or another named place

Who publishes the Incoterms rules?

Since its founding in 1919, ICC has been committed to the facilitation of international trade

Different practices and legal interpretations between traders around the world necessitated a common set of rules and guidelines. As a response, ICC published the first Incoterms rules in 1936. We have been maintaining and developing them ever since

Why use Incoterms rules in international trade?

Although other clauses for global trade exist around the world, such as the Harmonised Tariff Schedule of the United States, Incoterms rules are global in their reach. Similarly, Incoterms rules do not include trade terms codified for national purposes, such as the “less than truckload shipping” (LTL) rule of the United States. Unlike national trade policies, Incoterms rules are universal, providing clarity and predictability to business

How Incoterms relates to Ocean Footprint and your business with us

As an international ISO9001 certified business Ocean Footprint adheres to the Incoterms 2020 and by default, (unless specifically instructed otherwise by our client), offer product delivered by the following Incoterms:

FCA – Free Carrier (from Ocean Footprint premise)

Can be used for any transport mode, or where there is more than one transport mode. A very flexible rule that is suitable for all situations where the buyer arranges the main carriage. In all cases, the seller is responsible for export clearance; the buyer assumes all risks and costs after the goods have been delivered to the named place

For example:

• Seller arranges pre-carriage from seller’s depot to the named place, which can be a terminal or transport hub, forwarder’s warehouse etc. Delivery and transfer of risk takes place when the truck or other vehicle arrives at this place, ready for unloading – in other words, the carrier is responsible for unloading the goods. (If there is more than one carrier, then risk transfers on delivery to the first carrier.)
• Where the named place is the seller’s premises, then the seller is responsible for loading the goods onto the truck etc. NB this is an important difference from Ex Works EXW

FCA is the rule of choice for containerised goods where the buyer arranges for the main carriage

DAP – Delivered at Place (named place of destination)

Can be used for any transport mode, or where there is more than one transport mode. The seller is responsible for arranging carriage and for delivering the goods, ready for unloading from the arriving means of transport to the named place.  (An important difference from Delivered at Place Unloaded DPU)

Risk transfers from seller to buyer when the goods are available for unloading; so unloading is at the buyer’s risk. The buyer is responsible for import clearance and any applicable local taxes or import duties

Ocean Footprint INCOTERMS 2020 summary document