Incoterms 2020 vs 2010: What Changed (DAT to DPU, CIP Insurance, FCA B/L)

What changed in Incoterms 2020

The International Chamber of Commerce (ICC) revises the Incoterms rules about every ten years. Incoterms 2020 replaced Incoterms 2010 as the current edition on 1 January 2020. The list of rules barely changed, but several obligations did:

• DAT (Delivered at Terminal) became DPU (Delivered at Place Unloaded). The named place no longer has to be a terminal: it can be a warehouse, a factory or any other place, as long as the seller can unload the goods there. DPU is still the only rule under which the seller unloads at destination.
• CIP now requires the seller to insure on Institute Cargo Clauses (A), all-risks cover, instead of the minimum Clauses (C) required in 2010. CIF keeps the minimum Clauses (C), because it is mostly used in commodity trade by sea. Under both rules the cover is at least 110% of the price, and the parties may agree a different level.
• FCA has a new option for the bill of lading: the parties can agree that the buyer instructs its carrier to issue an on-board bill of lading to the seller after loading, so a seller paid by letter of credit can present one.
• The parties may use their own transport. Incoterms 2010 assumed a third-party carrier; Incoterms 2020 allows the seller to carry the goods itself under DAP, DPU and DDP, and the buyer to collect them itself under FCA.
• Security-related requirements, such as advance cargo information and screening, are now allocated in the carriage and the clearance articles (A4/B4 and A7/B7), together with their costs.
• Every cost each party bears is listed in one article, A9/B9 "Allocation of costs", instead of being spread across the rule.
• The articles were reordered so that delivery (A2) and transfer of risk (A3) come first, and the guidance notes became longer "Explanatory Notes for Users".

What stayed the same

The 2020 edition keeps the same split: EXW, FCA, CPT, CIP, DAP, DPU and DDP for any mode of transport, and FAS, FOB, CFR and CIF for sea and inland waterway only. Under every rule, where the seller delivers, where risk passes and who pays the main freight are the same as in 2010; DPU only widened DAT's place of delivery beyond a terminal.

As before, the Incoterms rules do not deal with the price, payment, transfer of ownership, remedies for breach or the governing law. Those still belong in the sales contract.

Which edition applies to your contract

The parties choose the edition. A contract can still say "CIF Shanghai Incoterms 2010", and then the 2010 text applies, including its insurance and delivery terms. If a contract or a letter of credit gives only "CIF Shanghai" with no edition, the parties may read it under different rules, which matters most for CIP insurance, FCA bills of lading and DAT or DPU.

Trouble usually starts when the documents disagree: a buyer's old purchase order template still says Incoterms 2010 while the proforma invoice says 2020, or a letter of credit asks for DAT, a rule the 2020 edition no longer has.

What to update when you move from 2010 to 2020

Check your quotation, proforma invoice, contract and invoice templates, and the wording your bank uses in letter of credit applications:

• Replace DAT with DPU, and name the exact place where the goods will be unloaded.
• For CIP, price all-risks insurance, Clauses (A), which usually costs more than Clauses (C), or agree in the contract that a lower cover is enough.
• For FCA sales paid by letter of credit, agree in the contract that the buyer will have its carrier issue an on-board bill of lading to you.
• Write every term as rule + precise place + "Incoterms 2020", and make the letter of credit, invoice and transport document match it.