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Incoterms 2020

The International Chamber of Commerce (ICC) will soon release the new Incoterms 2020, providing certainty and clarity to businesses trading across borders. The new Incoterms will be effective as of January 1st, 2020.

Every 10 years, the International Chamber of Commerce evaluates and revises the International Commercial Terms, better known as Incoterms, as a means of creating greater uniformity and effectiveness across the shipping industry. The latest version, Incoterms 2010, will stay in effect until January 2020.

What does "Incoterms" stand for?

It is an acronym standing for international commercial terms. Incoterms is a trademark of the International Chamber of Commerce, registered in several countries.

The Incoterms rules feature abbreviations for terms, like FOB (“Free on Board”), DAP (“Delivered at Place”), EXW (“Ex Works”), CIP (“Carriage and Insurance Paid To”), which all have very precise meanings for the sale of goods around the world. These terms hold universal meaning for buyers and sellers around the world.

The main Incoterms changes that are being considered are:

• The removal of FAS (Free Alongside Ship) as it is being used infrequently;
• Separating FCA (Free Carrier) into two separate Incoterms: one for road delivery and one for maritime delivery;  
• The committee is also considering bringing back the terms FOB (Free on Board) and CIF (Cost, Insurance, Freight), instead of the FCA and CIP (Cost and Insurance Paid to) used for non-container shipments;
• There is also a debate about the creation of a new Incoterms called CNI (Cost and Insurance) to bridge the gap between FCA and CFR/CIF (Cost and Freight/Cost, Insurance, Freight). Currently, FCA includes the cost of international insurance on account of the seller-exporter, while CFR/CIF does not include the cost of freight;
• Lastly, to alleviate questions surrounding the party responsible for paying Customs fees, the ICC will evaluate the creation of 2 Incoterms to replace DDP (Delivered Duty Paid).

Other issues and updates being evaluated during this round include:

• Transportation security
• Regulations on transportation insurance
• Relationship between the Incoterms and the International Sale Contract

We will provide another update once the official Incoterms 2020 rules have been announced by the ICC. Please contact us if you have any questions.

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Chinese New Year: Impact on logistics

In 2021, Chinese New Year falls on February 12, it is the biggest festival in China where people celebrate the beginning of a new year with their families. The week-long national public holiday has consequences on global supply chains.

The following information provides an overview of some key facts of the festival and its possible impacts on logistics.

Dates and key facts

• February 12, 2021 marks the start of the Chinese New Year (the year of Ox).
• Chinese national holiday begins on February 11 and ends on February 17, meaning that most of the businesses, including DACHSER branches in China, will be closed and resumes on February 18.
• Factories and manufacturing sites used to be closed for a longer period of time. Production might pause already one week before Chinese New Year, some factories will only resume one month after.
• The long holiday allows workers in the city to travel back to their hometown for a family reunion, though it might not be the case this year due to the pandemic.

Impact on supply chain

• Extensive holidays in China can lead to delays to your shipments for up to one month.
• Due to the abovementioned closing period of manufacturing industries, there will be no productions from China for at least a week. Even though factories will be restarting gradually, operations will not resume to full swing immediately.
• Productions from other countries in Asia will also be impacted as some parts might come from China or the assembling processes are done there.
• Most shippers will stock up inventories that are sufficient to cover the Chinese New Year period, this leads to a pre-holiday cargo rush; it will also take some time after the festival to normalize the market conditions.

Get prepared

To avoid unnecessary price hikes and delays, it is strongly recommended to place bookings well in advance. At DACHSER, our logistics experts can help you to plan together. Feel free to discuss with us about your needs and we can work out the best to maintain your supply chain uninterrupted throughout the Chinese New Year.