Information

Incoterms 2021

What does Incoterms mean?

Incoterms are international rules recognized by government customs authorities, law firms, and entrepreneurs around the world as basic conditions for international trade in goods. The scope of Incoterms extends to the rights and obligations of the parties under the contract of sale in terms of transportation of goods from the seller to the buyer, liability for loss and damage to goods, customs clearance, and insurance.

Incoterms (International commerce terms) is a trademark of the International Chamber of Commerce (ICC). Incoterms use three-letter abbreviations for trade terms (delivery bases) of international trade and provide the necessary instructions for all participants in global trade. Incoterms delivery terms are practically the main standard in international business.

Which Incoterms rule should be used in 2021?

The Incoterms 2020 rules are the latest version of the rules, which are valid in 2021 and will be valid for this decade, until 2030. The next revision of the Incoterms rules is planned for 2029.

The parties to the sales contract for goods in 2021 can continue to use the Incoterms 2010 rules, or the Incoterms 2000 rules, and even choose earlier versions of Incoterms, so it is important to clearly indicate the selected version in the contract. However, ICC recommends participants of foreign economic activity to use the latest version of the Incoterms 2020 rules.

Which Incoterms term should be used in the contract?

The terms of delivery of Incoterms 2020, like the previous version of the rules of Incoterms 2010, consists of 11 trade terms, which are divided into 2 categories depending on the mode of transport.

I INCOTERMS RULES 2020 FOR ANY MODE(S) OF TRANSPORTII INCOTERMS RULES FOR MARITIME AND INLAND WATERWAY TRANSPORT
EXW - «Ex Works»
FCA - «Free Carrier»
СРТ - «Carriage Paid to»
CIP - «Carriage and Insurance Paid to»
DPU - «Delivered Named Place Unloaded»
DAP - «Delivered at Place»
DDP - «Delivered Duty Paid»
FAS - «Free Alongside Ship»
FOB - «Free on Board»
CFR - «Cost and Freight»
CIF - «Cost Insurance and Freight»

Incoterms 2020 can be divided into four groups of supply basis of goods (E, F, C, and D). This classification is based on two principles: defining the obligations of the parties in relation to the transportation of the supplied goods and increasing the seller's obligations from minimum to maximum. Group "E" - EXW delivery condition, according to which the seller only places the goods at the buyer’s disposal at his premises; followed by group "F" - the terms of delivery FCA, FAS, and FOB, according to which the seller is obliged to transfer the goods to the carrier specified by the buyer; then group "C" - the terms of delivery CFR, CIF, CPT, and CIP, according to which the seller is obliged to enter into a contract of carriage, but without assuming the risk of loss or damage to the goods or additional costs due to events that occurred after shipment and dispatch; and, finally, group "D" - the terms of delivery DAP, DPU, and DDP, under which the seller must bear all costs and risks necessary to deliver the goods to their destination.

Group E (Shipment)

Terms of delivery EXW Incoterms

Terms of delivery EXW Incoterms 2020 stands for "Ex Works" named place. The seller is obliged: to provide the goods, ready for shipment. The buyer is obliged to: perform export, import customs clearance, and deliver the goods. Risks pass at the time of transfer of the goods to the seller's warehouse. The main difference is that the EXW delivery basis imposes minimal obligations on the seller.

Group F (Main carriage paid by the buyer)

Terms of delivery FCA Incoterms

Terms of delivery FCA Incoterms 2020 - stands for "Free Carrier" named place. The seller is obliged to: carry out export customs clearance and ship the goods to the carrier designated by the buyer. The buyer is obliged to: deliver the goods and carry out import customs clearance. The risks are transferred when the seller transfers the goods to the carrier. In accordance with the changes in the new Incoterms 2020 rules, the FCA delivery condition allows the parties to agree in the sales contract that the buyer when using a sea container mode of transport, must instruct his carrier to issue a bill of lading with an onboard record to the seller.

M - Union

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''M-Union'' Ltd
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