Delivery
Under the Incoterms rules, “delivery” is linked to the transfer of risk and responsibility for
the consignment from the seller to the buyer.
Particular care must be taken with the “C” rules:
“CPT Carriage Paid to”,
“CIP Carriage and Insurance Paid to”,
“CFR Cost and Freight“,
“CIF Cost Insurance and Freight“.
Consider this rule “CIP Shanghai Terminal 3”
This rules obliges the seller to contract with a carrier to transport the goods to the specified place, Shanghai Terminal 3. This is the named place of destination.
However there is another critical point – the point where the seller hands the goods over to the carrier. This is the place of delivery, where risk passes from seller to buyer.
In this example, there are a number of possible places of delivery – e.g. it could be the container yard at the place of loading for the sea voyage (e.g. Portsmouth berth 2); or it could be the seller’s premises, or another logistics hub . So it is good practice for the buyer and seller to identify the place of delivery as well as the place of destination, and to include it in the commercial agreement.
If a place of delivery has not been agreed, and there is more than one carrier, then by default it is taken to be the point where the goods are taken in charge by the first carrier.
For the “sea and inland waterway” rules “CIF Cost Insurance and Freight“, “CFR Cost and Freight“, the goods are deemed to be delivered when placed on board the vessel for transport to the place of destination.
For more details regarding the updated 2020 terms, please speak with your nominated shipping company or refer to the International Chamber of Commerce.
There are two key changes in Incoterms ® 2020 compared to the last edition:
- DAT (Delivered at Terminal) is renamed Delivered at Place Unloaded (DPU)
- FCA (Free Carrier) now allows for Bills of Lading to be issued after loading
Other changes include:
- CIF (Cost, Insurance and Freight) and CIP (Carriage and Insurance Paid To) set out new standard insurance arrangements, but the level of insurance continues to be negotiable between buyer and seller.
- Where listed, cost allocation between buyer and seller is stated more precisely – one article lists all costs the seller and the buyer are responsible for.
- FCA (Free Carrier), DAP (Delivered at Place), DPU (Delivered at Place Unloaded) and DDP (Delivered Duty Paid) now take account of buyer and seller arranging their own transport rather than using a third party.
- Security-related obligations are now more prominent.
- “Explanatory Notes for Users” for each Incoterm® have replaced the 2010 edition’s Guidance Notes, and are designed to be easier for users.
- CIP now requires as default insurance coverage ICC A or equivalent. It was ICC C under Incoterms® Required insurance coverage under CIF remains.