DISTINGUISHING INCOTERMS 2010 AND INCOTERMS 2020: KEY UPDATES BUSINESSES NEED TO KNOW

In international trade, Incoterms rules issued by the International Chamber of Commerce (ICC) serve as a foundation for defining risks, costs, and responsibilities between buyers and sellers. Although Incoterms 2010 can still be used if mutually agreed upon, Incoterms 2020 is the latest version and includes updates that better reflect current trade practices.

Failing to understand the differences between these versions can lead to costly mistakes in contracts, insurance, or documentary credit (L/C) payments. Let’s review the most important changes and explore how to ensure smooth shipment operations with Songwin Logistics.

1. Four Key Differences Between Incoterms 2010 and Incoterms 2020

Below is a summary and analysis of the most critical updates:

Change 1: DAT replaced by DPU

• Incoterms 2010 (DAT – Delivered at Terminal): Delivery occurs at a specified terminal, requiring goods to be unloaded at a designated terminal (port, warehouse, etc.).
• Incoterms 2020 (DPU – Delivered at Place Unloaded): Delivery takes place at any agreed location where goods are unloaded. This expands flexibility, allowing delivery to locations such as the buyer’s warehouse, factory, or even an open yard, as long as unloading is possible.

Change 2: Higher insurance coverage for CIP

• Incoterms 2010: Both CIF and CIP require minimum insurance coverage (Institute Cargo Clauses C).
• Incoterms 2020: A clear distinction is made. CIF remains at minimum coverage (Clause C), while CIP requires maximum coverage (Clause A), offering broader protection.

Change 3: On-board Bill of Lading under FCA

• Under FCA, goods are typically handed over to the carrier before loading onto the vessel. This created challenges for sellers needing an on-board Bill of Lading for L/C payments.
• Incoterms 2020 update: The buyer can instruct the carrier to issue an on-board Bill of Lading to the seller after loading, resolving payment-related complications with banks.

Change 4: Use of own means of transport (FCA, DAP, DPU, DDP)

• Incoterms 2010: Assumes transportation is handled by a third-party carrier.
• Incoterms 2020: Recognizes that buyers (under FCA) or sellers (under DAP, DPU, DDP) may use their own vehicles (e.g., trucks) without hiring external carriers.

2. Flexible Application of Incoterms – With Songwin Logistics by Your Side

Although the changes in Incoterms 2020 may seem minor, they directly impact profit margins, insurance costs, and legal risks for businesses. To avoid procedural complications and unexpected risks during transportation, Songwin Logistics is here to provide comprehensive solutions.

With strong hands-on experience in the logistics industry, we proudly offer professional services to help you confidently close international deals:

• Free Contract & Incoterms Consultation: Our experts analyze your shipment, routes, and business capacity to recommend the most advantageous Incoterms 2020 terms while minimizing hidden risks.
• Competitive International Freight Rates: Access to a global transport network (sea freight FCL/LCL, air freight) with optimized costs, supporting your Incoterms negotiations.
• Full-Service Customs Brokerage: Fast and accurate handling of documentation and customs clearance. Support for permits, C/O, and specialized inspections.
• Flexible Inland Trucking: A modern fleet ready to connect cargo from port to warehouse (and vice versa), ensuring safe and timely delivery, especially for EXW, FCA, and DDP terms.

Ensuring cargo safety and optimizing your costs are our top priorities. Let Songwin Logistics be your reliable partner in your supply chain!

Contact us now for a free consultation!

SONGWIN INTERNATIONAL LOGISTICS VIETNAM CO., LTD
📍 Address: 344 Nguyen Trong Tuyen Street, Tan Son Hoa Ward, Ho Chi Minh City
📞 Hotline (24/7): 083.681.3969 - 0373.262.105
📧 Email: Sales2@songwinlog.com

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