Incoterms 2020 is the current version of the International Chamber of Commerce Incoterms rules. Published in September 2019 and effective from 1 January 2020, it defines eleven trade terms that allocate the obligations, costs, and risks between buyer and seller in cross-border trade. The 2020 revision replaced Incoterms 2010 but did not eliminate it. Contracts can still cite Incoterms 2010 if both parties agree, but the practical default for new chemical sourcing contracts written today is Incoterms 2020.
The eleven rules
Incoterms 2020 splits the rules into two groups by transport mode.
Any mode of transport (seven rules):
| Rule | Full name | Risk transfer | Cost transfer |
|---|---|---|---|
| EXW | Ex Works | At seller’s premises | At seller’s premises |
| FCA | Free Carrier | At named carrier in origin country | At named carrier in origin country |
| CPT | Carriage Paid To | At first carrier in origin country | At named destination |
| CIP | Carriage and Insurance Paid To | At first carrier in origin country | At named destination |
| DAP | Delivered at Place | At named destination ready for unloading | At named destination ready for unloading |
| DPU | Delivered at Place Unloaded | At named destination after unloading | At named destination after unloading |
| DDP | Delivered Duty Paid | At named destination after import clearance | At named destination after import clearance |
Sea and inland waterway only (four rules):
| Rule | Full name | Risk transfer | Cost transfer |
|---|---|---|---|
| FAS | Free Alongside Ship | At dock alongside vessel at load port | At dock alongside vessel at load port |
| FOB | Free On Board | At ship’s rail at load port | At ship’s rail at load port |
| CFR | Cost and Freight | At ship’s rail at load port | At destination port |
| CIF | Cost, Insurance and Freight | At ship’s rail at load port | At destination port |
For chemical sourcing from China, the rules in routine use are FOB, CIF, EXW, DDP, and increasingly DAP for door-delivered cargo. The other six come up occasionally and matter for unusual cargo configurations or air freight.
What changed from Incoterms 2010
Six substantive changes made it into Incoterms 2020.
- DAT renamed to DPU. Delivered at Terminal became Delivered at Place Unloaded to reflect that the named destination does not have to be a transport terminal.
- CIP insurance upgraded. CIP now requires Institute Cargo Clauses A (all-risks cover). CIF stayed at Clauses C (named-perils only). Before 2020, both were minimum cover.
- Bills of lading on FCA shipments clarified. Buyers using FCA can now require the seller to instruct the carrier to issue an on-board bill of lading, useful when the buyer needs an on-board B/L for a Letter of Credit.
- Buyer’s and seller’s transport arrangements explicitly addressed. FCA, DAP, DPU, and DDP now explicitly accommodate the buyer or seller using their own transport rather than a third-party carrier.
- Cost allocation listed in one place per rule. Each rule’s article A9/B9 (“Allocation of costs”) now lists every cost in one place rather than scattered across the rule.
- Security obligations expanded. Each rule now explicitly addresses security clearance and screening obligations.
When to specify “Incoterms 2020” on a purchase order
Always cite the version. Write “FOB Shanghai (Incoterms 2020)” not just “FOB Shanghai.” Two reasons:
- CIP changed materially in 2020. A buyer reading “CIP Houston” without a version reference cannot tell whether the seller’s insurance obligation is ICC Clauses A (2020) or ICC Clauses C (2010). The version reference closes the ambiguity.
- DAT vs DPU. Old contracts referencing “DAT” still exist. A new contract should use DPU and cite Incoterms 2020.
For all other rules the substantive obligations carry over from 2010, but the version reference removes the question.
What Incoterms do not cover
Incoterms allocate transport, risk, and cost. They do not cover:
- Title transfer (the contract of sale handles that)
- Payment terms (T/T, LC, open account)
- Force majeure
- Dispute resolution and governing law
- Warranties on the goods themselves
A purchase order using Incoterms still needs all of these covered separately.
Related terms
The eleven Incoterms are linked above in the rule tables. BOL is the document that proves Incoterms-defined delivery on sea cargo.