This document provides an overview of Incoterms 2020, which are international commercial terms used in contracts of sale to clarify responsibilities of buyers and sellers in international trade. It explains various Incoterms and their implications, such as EXW (Ex Works), FCA (Free Carrier), CPT (Carriage Paid To), CIP (Carriage and Insurance Paid), DAP (Delivered At Place), and FOB (Free On Board). It cautions that the Incoterms do not fully explain processes and responsibilities may depend on the mode of transport and named place of delivery. The document advises traders to understand the Incoterms used in sales contracts and consider how they may impact preferential trade agreements and tar

1. Austrade FTA presentation
Incoterms 2020
24 June 2020

3. What are Incoterms 2020?
Incoterms = International Commercial Terms
An Incoterm is used in the contract of sale.
It refers to the party that is responsible for certain aspects of the
transition between seller and buyer.
These are rules for interpreting trade terms and have some variances
to Customs use of similar terms.
Use "traders" as a general term but the rules refer to "seller" and
"buyer". Avoid "exporter" and "importer".

4. International trade always goes well
…. Not!

5. Any mode/s of transport:
For road/rail/air/FCL/LCL or any combination of them.
EXW - Ex Works (named place of delivery): Best avoided, buyer
must do everything including export formalities, may be GST issues.
FCA - Free Carrier (named place of delivery): Two delivery options:
a) at seller's premises loaded onto buyer's carrier's truck
b) at other premises (typically terminal) not unloaded from seller's
truck.
Seller carries out export formalities, buyer arranges and pays for
freight.
Mode of transport is important

6. CPT - Carriage Paid To (named place of destination): Seller carries out
export formalities, pays for carriage. However delivery occurs when
seller hands goods to its carrier at origin.
CIP - Carriage Insurance Paid to (named place of delivery): As for CPT
but seller also takes out maximum insurance cover for buyer's risk.
DAP - Delivered at Place (named place of delivery)
DPU - Delivered at Place Unloaded (named place of delivery)
DDP - Delivered Duty Paid (named place of delivery)
Caution: two possible places of delivery for each - terminal or beyond - and the rules don't
explain the processes at all.
"ICC Guide on Transport and the Incoterms 2020 Rules"
being drafted at present
Any mode/s of transport (cont.)

7. Only for bulk or breakbulk, not for containers
FAS - Free Alongside Ship (named port of loading): Seller delivers
goods on wharf or barge alongside ship, rarely used. Seller carries out
export formalities. Buyer contracts for carriage.
FOB - Free On Board (named port of loading): Seller delivers the goods
on board the ship. Seller carries out export formalities. Buyer contracts
for carriage.
CFR - Cost and Freight (named port of destination): Seller puts goods
on board, carries out export formalities, contracts for carriage.
CIF: Cost Insurance and Freight (named port of destination): As for CFR
and seller takes out minimum insurance cover for buyer's risk.
Sea or Inland Waterway

8. Responsibilities: sellers - buyers

9. Issues for Trade and Preferential
Trade Agreements
1. Makes sure you understand the Incoterm 2020 your sales
teams are using.
2. PTA “preferential” access is a saving of the tariff in the
country of import.
3. Who is paying the tariff?
• Selling to a related company?
• Are you giving this discount to your buyer?
4. Consider altering your contract terms.

10. Available to all – get the app and other
tools from 2go.iccwbo.org

11. Bryan Clark
Director, International Chamber of Commerce, Australia
bryan.clark@australianchamber.com.au
+61 (0) 428645232
2go.iccwbo.org
For more information contact:
2go.iccwbo.org
2go.iccwbo.org