Incoterms 2020 for meat imports

Incoterms® 2020 is the International Chamber of Commerce's current edition of the delivery-terms rules. It entered into force on 1 January 2020 and contains eleven three-letter rules. Six carry most refrigerated and frozen meat trade: FCA, FOB, CFR, CIF, DAP and DDP.

Who owns the rules, and what they are for

The ICC writes and publishes the Incoterms rules. No government or carrier owns them and they are not law: they apply because the sales contract says so. They answer four questions only: where the seller delivers, when risk passes, who pays which costs, and who handles export and import formalities.

Write the term out in full — rule, named place or port stated as precisely as possible, and edition. "CFR Shanghai Incoterms® 2020", not "CFR Asia". Under several rules the named place is also where risk changes hands.

The eleven rules at a glance

The first seven work for any mode of transport; FAS, FOB, CFR and CIF are for sea and inland waterway transport. DPU replaced DAT (2010) and is, in the ICC's words, the only rule requiring the seller to unload at destination.

The rules used in reefer meat trade

FOB, CFR and CIF

These stay common because documentary credits are built around an on-board bill of lading. Risk passes when the goods are on board at the port of shipment. CFR and CIF are two-point rules: the named port is the destination port, but risk still transfers at loading.

Under CIF the seller's insurance obligation is the ICC minimum — Institute Cargo Clauses (C), for at least the contract price plus 10% (110%), in the contract currency. Clauses (C) is a restricted, named-perils form; Clauses (A) is "all risks". Meat buyers therefore normally contract for wider cover and address refrigeration breakdown expressly in the policy.

FCA, CPT and CIP

Where goods are handed to the carrier before loading — the normal container case — the ICC introduction recommends FCA, CPT and CIP over FOB, CFR and CIF: under FOB the seller keeps risk until the container is aboard but lost control at the terminal gate days earlier.

FCA delivers where the seller stops controlling the box: loaded onto the buyer's collecting vehicle at the seller's premises, or, elsewhere, ready for unloading from the seller's arriving vehicle at the carrier's disposal. FCA A6/B6 lets the parties agree that the buyer instructs its carrier to issue an on-board bill of lading to the seller, so an FCA sale can still be financed under a credit calling for one. CIP raises the seller's minimum cover to Clauses (A).

DAP and DDP

Under DAP the seller delivers at the named destination ready for unloading; the buyer unloads, clears and pays duty. DDP moves import clearance and the duties, taxes and other import charges onto the seller.

For products of animal origin that is often impractical: the consignment must be presented for veterinary control at a designated entry point, and a party in the destination country must be named on the import file. In the EU it enters through a designated border control post and the operator responsible for the consignment lodges the Common Health Entry Document. ICC guidance is explicit — where local rules prevent the seller from clearing imports, DAP is the more suitable rule.

Why EXW is rare for containerised meat

Under EXW the seller only places the goods at the buyer's disposal, not loaded, with no obligation to clear them for export. An export declaration still has to be lodged — compulsory for Union goods leaving the EU customs territory — and the person acting as exporter for EU customs purposes must be established in the customs territory of the Union, which a third-country buyer usually is not.

ICC puts it the other way round: a seller may end up treated as exporter of record where the buyer is not established in the seller's country, and it advises FCA instead of EXW wherever goods cross a border. FCA at the seller's premises gives the same commercial split while leaving loading and export clearance with the party able to perform them.

Where the Incoterms rules stop

They do not transfer ownership, fix the price, set payment terms, or deal with breach, sanctions or force majeure. Nor do they create certification obligations: they allocate formalities and a duty to assist with documents, while the substance of health certification is set by the importing country.

They say nothing about temperature. Set point, tolerance, ventilation, pre-trip inspection and logger fitment are contract terms. Choosing CIF does not protect a buyer against a reefer that ran warm; it determines who must prove when the excursion began.

They do not allocate demurrage, detention or terminal storage. Under CFR and CIF the seller bears only the unloading charges at the discharge port that were for its account under the contract of carriage; under CPT and CIP it cannot recover destination unloading costs separately unless agreed.

What this means for your order

• Decide where risk should pass, then pick the rule. CIF does not keep risk with the seller until arrival.
• If your bank needs an on-board bill of lading, use the FCA A6/B6 option rather than defaulting to FOB.
• Specify insurance and the cold chain separately from the Incoterm: clause set, refrigeration cover, deductible, logger fitment, download and tolerance.
• Ask for DDP only where the seller can lawfully clear meat for import in your market; otherwise DAP or DPU.
• Agree in writing who carries demurrage and detention at each end, and when each clock starts.