Incoterms® 2020

An OL Introduction to the Incoterms® & What your company needs to know.

Foreman with clipboard in container shipping area

What are Incoterms®?

Incoterms® define the level of risk within the international shipping process. Outlining where the responsibility and costs for cargo transfers between sellers (shippers) and buyers (consignees).

Incoterms® is an acronym that stands for “International commercial terms.” Developed and trademarked by the International Chamber of Commerce, Incoterm’s outline to buyers and sellers when their responsibility for costs associated with shipping begins and ends throughout the supply chain.

As these rules are accepted worldwide, it is vital to understand what you and your company are responsible for when handling international shipments.

 

Incoterms® deal with four main areas related to transportation of goods:

What taxes/duties must each stakeholder cover?

Who arranges permissions, documentation and is responsible for the insurance?

Which part of the transportation process is overseen by each stakeholder?

When the risk transfers from seller to buyer.

OL-USA Incoterms® 2020 Accountability Chat - Click image to download PDF file

The OL USA Incoterms® Table

Our Incoterms® 2020 Table was designed with clarity in mind and includes all recognized designations. Print a copy for your office and always know where you are in the process.
Download now

What happened to Incoterms® 2019?

What happened to Incoterms® 2019, Incoterms® 2018…? The latest edition of the Incoterms® rules is Incoterms® 2020. However, Incoterms® 2010 remains in effect for anyone using them.

Incoterms® 2010?

The International Chamber of Commerce updates the Incoterms® every ten years. Although Incoterms® 2020 went into effect, the 2010 version continues to be used and recognized internationally.
OL-USA – When selecting which Incoterms® suit your needs, it is important to keep in mind two considerations: Cost and Controls

Incoterms® Definitions by Category

Incoterms® fall into two categories: rules for any mode of transportation or rules for sea and inland waterway transportation

Applies to Any Mode of Transportation

EXW or Ex-Works:

The seller’s sole responsibility is making the goods available to the buyer for pickup at the place of origin or at a designated location. Upon pickup, the buyer assumes all costs and accountability for the rest of the shipping process.

DAP or Delivered at Place:

The seller bears all costs and risks involved in the export and delivery processes. Once the seller delivers the goods at the port of destination, the buyer must unload, clear import customs, and deliver the goods to their final destination.

DDP or Delivered Duty Paid:

The seller fulfills all capacities in the shipping process. The buyer simply receives the goods at the agreed upon final delivery location.

Applies to Sea & Inland Waterway Transportation

FOB or Free on Board:

The seller clears the goods for export and delivers them on board the vessel at the port of shipment. The buyer then assumes all risks and costs including the carriage charges.

CFR or Cost & Freight:

The seller clears the goods for export and is responsible for the freight costs to the port of destination. However, the buyer assumes risk once the goods are delivered onboard the vessel at the port of export.

CIF or Cost Insurance & Freight:

The seller clears the goods for export and is responsible for the freight costs to the port of destination. The seller must also provide insurance to cover the goods in transit. The seller maintains responsibility during the cargo’s journey but all accountability transfers to the buyer upon delivery at the port of destination.