Today’s subject: Incoterms 2020. Exciting stuff, right?
If you’re involved in international trade, you should know and be comfortable with Incoterms. These internationally recognized commercial terms play a key role in global business by defining the responsibilities of buyers and sellers in cross-border transactions. In short, they help determine who is responsible for what—from shipping costs and insurance to duties and delivery points.
When used correctly, Incoterms reduce confusion, avoid costly disputes, and streamline trade negotiations across languages and legal systems. With trillions of dollars in global trade flowing each year, the clarity they provide is critical.
What Are Incoterms?
Incoterms (short for International Commercial Terms) are published by the International Chamber of Commerce (ICC) and are updated every 10 years to reflect modern trade practices. The most recent version, Incoterms 2020, succeeded Incoterms 2010 and introduced refinements that better align with current global logistics.
They define details such as:
- Who arranges and pays for transportation
- Who handles insurance
- Where risk transfers from seller to buyer
- Customs responsibilities and documentation
Examples include terms like FOB (Free on Board), DAP (Delivered at Place), and EXW (Ex Works).
The Future of Trade: From Ports to Planets
Fifty years ago, Neil Armstrong stepped onto the moon. Fast forward to today, and both government agencies and commercial ventures are planning missions to the moon, Mars, and beyond. While the excitement of space exploration captures imaginations, there’s also a serious logistics challenge behind it—cargo has to move there.
That’s where Incoterms could play an unexpected, yet essential role.
Space Logistics: Why Incoterms Still Matter
As companies like SpaceX, Blue Origin, and national space programs expand their reach, space is no longer just for astronauts—it’s becoming a domain for commercial enterprise. Equipment, research payloads, infrastructure components, and eventually even consumer goods may need to be shipped off-world.
But how do you define delivery terms for space-bound cargo?
- Who assumes responsibility if a shipment of solar panels destined for a lunar base is lost on launch?
- If equipment is damaged while in orbit, is the risk with the buyer or the seller?
- How do treaties governing space intersect with commercial law?
These are no longer theoretical questions. There are ongoing discussions within trade and legal communities to explore how Incoterms—or a new set of interplanetary commercial terms—could address space logistics in the decades to come.
Imagine the Future: DAP – Sea of Tranquility
Picture this: You’re invoicing a client for a shipment of modular habitat components with the delivery term DAP – Sea of Tranquility. Yes, the same location where Armstrong set foot. It may sound like science fiction today, but so did cross-Atlantic shipping at one point in history.
As global trade moves from ocean freight and air freight to orbital freight, the importance of clearly defining responsibilities becomes even greater.
Final Thoughts
The world of logistics is evolving, and Incoterms 2020 reflect that evolution. As we look toward the future of space commerce, these terms—or their successors—may help lay the foundation for clear, structured trade even beyond our planet.
From Earth to orbit, the principles of clarity, responsibility, and trust remain the same. Trade will always follow opportunity, and Incoterms will help light the way.
Blog posting by Scott Hoffman, President of Jade International
