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Understanding and Applying Incoterms 2020

Apr 30, 2025

Incoterms 2020 in Practice Webinar

Presented by Dave Noah and Robert Imbriani

Introduction

  • Host: Dave Noah, founder of Shipping Solutions.
  • Speaker: Robert Imbriani, executive VP at Team Worldwide.
  • Focus on understanding and applying Incoterms 2020 in international trade.
  • Webinar originally aired in February 2021.

Objectives

  • Understand what Incoterms are and are not.
  • Discuss key elements of each term and their implications on trade.
  • Highlight changes from Incoterms 2010 to 2020.

Understanding Incoterms

What They Are Not

  • They are not payment terms or terms of ownership.
  • Not related to the American foreign trade definitions or US commercial code.
  • Not international laws or regulations.

What They Are

  • Internationally accepted rules for defining the responsibilities between buyers and sellers.
  • Help create a common business language in international trade.

Key Elements Discussed

  • Transfer of Risk: How and when the risk moves from seller to buyer.
  • Allocation of Costs: Which party bears what costs during the transaction.

Changes in Incoterms 2020

  • Major Change: DAT replaced by DPU.
  • Clarity and Expansion: Definitions clarified for terms like FCA and CIP.
  • Insurance: CIP now requires all-risk insurance.

Incoterms Categories

  1. For All Modes of Transport
    • EXW, FCA, CPT, CIP, DAP, DPU, DDP
  2. For Water Transport Only
    • FAS, FOB, CFR, CIF

Key Incoterms 2020 Terms

EXW (Ex Works)

  • Minimum responsibility for seller, maximum for buyer.
  • Buyer responsible for export clearance.
  • Seller fulfills obligation when goods are made available for pickup.

FCA (Free Carrier)

  • Seller delivers goods to the carrier at a named place.
  • Used for shipments to Mexico, among others.

CPT and CIP

  • CPT: Risk transfers at the international carrier.
  • CIP: Similar to CPT but includes insurance for the buyer.

DAP and DPU

  • DAP: Seller delivers to a named place, buyer unloads.
  • DPU: Similar to DAP, but seller also unloads.

DDP (Delivered Duty Paid)

  • Maximum responsibility for seller.
  • Seller handles customs clearance and related costs.

FAS, FOB, CFR, CIF (Water Transport Specific)

  • FAS: Seller places goods alongside the vessel.
  • FOB: Seller loads goods on board, buyer responsible once loaded.
  • CFR and CIF: Seller delivers to the destination, CIF includes insurance.

Application and Importance

  • Emphasizes the importance of naming the place in Incoterm agreements.
  • Understanding and agreeing on terms is crucial for both buyer and seller.

Conclusion

  • The session highlighted the importance of proper use of Incoterms in mitigating trade risks.
  • Attendees encouraged to engage with additional resources, webinars, and blogs for further learning.

Full transcript