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Kansas City is Ready for the New Incoterms 2020

Wednesday, October 02, 2019 7:00 PM | Deleted user

One of the signature ITC events of the year, INCOTERMS for AMERICANS, was held last Thursday September 26th at Kansas City’s landmark building, Union Station. INCOTERMS is such a critical and essential part of international trade that the event was sold out long before the day of the event. A diverse audience of lawyers, bankers, US Trade Representatives, freight forwarders & brokers, and of course, people from a wide range of industries experienced a once-in-a-decade expository presentation.

The speaker was the renowned Frank Reynolds, who has been a member of the INCOTERMS drafting group for over 30 years, served thirteen terms on the U.S. Department of Commerce District Export Council, wrote or co-authored eighteen books on international trade topics, all the while operating his own export business. People traveled from near and far to attend Frank’s seminar, and one of our attendees has followed Frank’s INCOTERMS seminar for over 10 years and flew from Portland Oregon to see Frank in person.

The day was filled with great information and vivid examples from small books to giant ocean yachts. Below are some highlights of the seminar content:

  • No major changes for the 2020 version
  • Total 11 codes broken down into 4 groups
    • E Group – Departure, place at Seller’s side
      • EXW
    • F Group – Main Carriage Unpaid, place at Seller’s side
      • FCA – Free Carrier
      • FAS – Free Alongside Ship
      • FOB – Free On Board
    • C Group – Main Carriage Paid, Place at Buyer’s side
      • CPT – Carriage Paid To
      • CIP – Carriage and Insurance Paid To
      • CFR – Cost and Freight
      • CIF – Cost Insurance and Freight
    • D Group – Arrival Contracts, place at Buyer’s side
        • DAP – Delivered at Place
        • DPU - Delivered at Place Unloaded
        • New term for 2020, formerly known as Delivered at Terminal
        • DDP – Delivered Duty Paid
  • INCOTERMS should always be accompanied by a geographic place
  • INCOTERMS are used exclusively in sales/purchase contracts, they are not law. Trading parties should have additional language to cover insurance, product specification and quality, delivery, payment arrangements, governing laws and regulations etc.
  • EXW – Minimum obligations for the seller, foreign buyers often use this but it has a lot of complications (liabilities of loading at seller’s place, origin country export policies etc.). FCA is a better term if the buyer wants more control of the shipment.
  • Major change for the layout of the book INCOTERMS 2020
    • 10 sections of A notes (Seller’s Obligations) and B notes (Buyer’s Obligations) are listed side by side for easy understanding (Page 21 to Page 133)
    • All 11 codes’ Buyer/Seller obligations are listed under each of the 10 categories for easy comparison (Page 135 to Page 182). This is practically helpful when buyer/seller is trying to determine which is the most favorite term to use
  • It is recommended that everyone to read through these notes rather than relying on simplified “Wall Charts”
  • For Domestic use, UCC has expanded FOB to include omni-transportation means
    • FOB Origin, Freight Collect (does not specify loading)
    • FOB Origin Car or other Vehicle, Freight Collect
    • FOB Origin, Freight Prepaid
    • FOB Destination, Freight Collect
    • FOB Destination, Freight Prepaid

For the first time, the ICC’s 2020 Drafting Group opened up to include experts from Australia, China and Turkey as well as from Europe and the United States. Over the 2 ½ year revision process, over 2,000 suggestions were received from the 130+ ICC national committees and related organizations. The resulting 2020 version incorporates changes in both substance and presentation.

Incoterms® 2020 rules will come into force on January 1, 2020.  It is the ninth Incoterms® revision since their inception in 1936. Professionals in the Kansas City region are ready for the new year.

By Ruiping Ramboldt, ITC Secretary

© 2021 International Trade Council of Greater Kansas City

ITCGKC is a 501(c)3 Organization

The International Trade Council of Greater Kansas City is a network of international business professionals, educators, and students that actively work with each other and the community to build a stronger support system for international trade in the Kansas City region.

PO Box 12340
Kansas City, MO 64116


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