September 2026
Incoterms® are a set of international trade terms published by the International Chamber of Commerce (ICC), which provide a standardised set of rules that traders in different countries can incorporate into contracts for the sale of goods.
They are intended to be jurisdiction-neutral, so that no legal system is favoured over another. The rules assign various responsibilities between the buyer and seller in a number of key areas, including responsibility for carriage, transfer of risk and the loading and unloading of goods.
The Incoterms® 2020 rules were published in September 2019 and came into force on 1 January 2020.
There are 11 Incoterms® 2020 rules:
- Seven rules apply to any mode of carriage: EXW, FCA, CPT, CIP, DAP, DPU and DDP.
- Four rules apply to carriage by sea and inland waterway only: FAS, FOB, CFR and CIF.
If you are not familiar with the Incoterms® 2020 rules, the key changes are summarised below.
What changed under Incoterms® 2020?
DAT replaced by DPU
DAT (Delivered at Terminal) has been removed and DPU (Delivery at Place Unloaded) has been introduced.
Under DPU, the place of destination where the seller unloads the goods can be a place other than a terminal. This provides greater flexibility around the location where goods are delivered and unloaded.
Use for domestic trade
EXW, FCA, DAP and DPU terms can be used for domestic trade.
The Incoterms® 2020 rules clarify that these terms are not restricted to international transactions.
Containerised freight
FAS, FOB, CFR and CIF terms are recommended for conventional sea freight only, rather than containerised freight.
Businesses should therefore consider whether one of the rules applicable to any mode of carriage would be more appropriate when goods are being transported by container.
Bills of lading under FCA
The Incoterms® 2020 rules introduce an option under FCA (Free Carrier) for the parties to agree that the buyer’s carrier can issue an on-board bill of lading to the seller after loading.
The seller will then be required to tender that bill of lading to the buyer.
Use of own transport
Under FCA, DAP, DPU and DDP, the buyer or seller can undertake the carriage themselves rather than entering into a contract for carriage with a third party.
Changes to insurance under CIP
There has been a change to the insurance requirements under CIP (Carriage and Insurance Paid To).
The seller must now obtain insurance cover complying with Clause A of the Institute Cargo Clauses, which provides more comprehensive cover than the seller’s obligations under the 2010 version of Incoterms®.
Security-related obligations
Incoterms® 2020 also includes greater detail around security-related obligations.
The parties should expressly consider the allocation of costs and responsibility relating to verified gross mass and other security requirements.
Are you using the right Incoterms®?
Incoterms® can have a significant impact on the responsibilities and risks of both buyers and sellers.
Businesses should consider which Incoterms® they typically use and whether the terms remain appropriate for their particular transactions. It is also important to ensure that standard contracts and other trading documentation correctly refer to the applicable Incoterms® 2020 rule.
The information above does not provide complete coverage of the subjects referred to and is not a substitute for professional legal advice and should not be relied upon as such
Let’s talk.
If you need advice on Incoterms®, international sales contracts or your business's trading arrangements, speak to our Commercial team about how we can help.
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