Changes to International Shipping Terms

International shipping terms are known as Incoterms which change every 10 years and are revised again as from 01 January 2020. They act as a guide for your orders and shipping.



INCOTERMS 2020

International shipping terms are known as Incoterms. The Incoterms® rules are the world’s essential terms of trade for the sale of goods. Whether you are filing an overseas 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. Incoterms determine the point at which the goods are delivered, the point at which risk in the goods for loss or damage is transferred from seller to buyer and the various costs associated with the transport of the goods.

They are revised every 10 years and change again as from 01 January 2020 to reflect current business practices, taking into account new technologies and challenges faced through the intervening period. To see the existing terms, ‘Incoterms 2010’ refer to this PDF page. We will post the updated version on line soon.

Key changes for 2020

Delivery place – Seeking to remove the confusion historically arising between DAT (delivered at terminal) and DAP (delivered at place), the former has been replaced by DPU (delivered at place unloaded). This serves to clarify that delivery is effected once the goods have been unloaded from the ship and made available to the buyer at a specified place in the terminal.

Insurance - Only two Incoterms obligate insurance, in each case requiring the seller to purchase insurance in the buyer’s name. CIF Seller buys the insurance in the name of the buyer at Cargo Institute clauses “C (which are restricted). CIP Seller buys the insurance in the name of the buyer at Cargo Institute clauses “A”. Parties can expressly agree alternative levels of insurance cover under both CIF and CIP.

Costs – Incoterms 2020 provides much more detail around costs and their allocation under A9. In general costs up to delivery are for the seller and the costs thereafter are for the buyer.

Security – The 2020 text provides more detail around security. A4/ B4 and A7/ B7 consider security aspects.

Own transport – Incoterms 2010 assumed that all transport would be undertaken by a third party. Incoterms 2020 recognises the concept of own transport.

FCA, FOB and bills of lading – FCA obligates the seller effectively up to the point that the goods are delivered to the quayside; FOB is still widely used (incorrectly) to undertake the same function. FCA is preferential for the seller given that it does not include the risk associated with loading the cargo onto the ship.

As licensed Customs Brokers and International freight forwarders, Alliance Intercontinental can offer you professional advice on international trade, shipping terms and Customs procedures. We handle cargo all major ports and airports around Australia.


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