INCOTERMS, they are a-changing!

Within a few short weeks, the International Chamber of Commerce (“ICC”) will release the much-anticipated INCOTERMS 2020 and, as it did in 2010, the publication of the ICC decisions will change the landscape of international trade.  As you may remember, the INCOTERMS were reduced from thirteen (13) to eleven (11) with the 2010 revisions. While discussions are still ongoing within the ICC Drafting Committee, indications are that they will amend existing INCOTERMS so that they clearly and accurately reflect current trade practices.

Some suggested changes include the following:

• Removal of FAS (Free Alongside Ship) as it is not a preferred term in international trade.
• Expansion of FCA (Free Carrier Alongside) used more frequently and it is anticipated this term could be become two classifications – one for use on land, the other for ocean transports.
• Removal of DDP (Delivered Duty Paid) and in its place the creation of two additional INCOTERMS; DTP (Delivered at Terminal Paid) and DPP (Delivered at Place Paid) which spells out the final delivery place for such shipments.
• Creation of a new INCOTERM CNI (Cost and Insurance) which allows for ‘risk’ to pass from the seller to the buyer at the port of departure.
• Possible Modification of INCOTERMS FOB (Free On Board) and CIF (Cost, Insurance and Freight) for container shipping. Both of these terms are for ocean shipments but it has been noted that the vast majority of exporter and importer are using these INCOTERMS incorrectly in the shipping process.
• Elimination of EXW (Ex Works) as an INCOTERM as it is not preferred for international trade. This elimination may be quite consequential for many U.S. exporters who have terms with their customers for title transfer at their door. However, this does not relieve the customer of their export compliance responsibilities.

As with other revisions to INCOTERMS, the latest round will likely be released in mid-September, 2019, and will become effective on January 1, 2020. Once the finalized INCOTERMS are released time is of the essence for companies to understand the language of the modifications and apply them correctly to their exports and/or imports.

Do you need help understanding INCOTERMS and other import/export regulations for your global trade?  Schedule a no-charge consultation with one of our team members today.