Incoterms 2020 at a glance.
Incoterms set out who arranges and pays for each part of the journey, and where risk passes from seller to buyer. Here is a summary of all 11 rules.
The 11 rules.
Seven work for any mode of transport. Four are for sea and inland waterway only.
| Rule | Name | Mode | Risk passes to buyer | Main carriage paid by | Insurance | Export clearance | Import clearance |
|---|---|---|---|---|---|---|---|
| EXW | Ex Works | Any | When goods are made available at the seller’s premises, not loaded | Buyer | Not required | Buyer | Buyer |
| FCA | Free Carrier | Any | When goods are handed to the buyer’s carrier at the named place | Buyer | Not required | Seller | Buyer |
| CPT | Carriage Paid To | Any | When goods are handed to the first carrier | Seller | Not required | Seller | Buyer |
| CIP | Carriage and Insurance Paid To | Any | When goods are handed to the first carrier | Seller | Seller, all-risks level (ICC A) | Seller | Buyer |
| DAP | Delivered at Place | Any | At the named destination, ready for unloading | Seller | Not required | Seller | Buyer |
| DPU | Delivered at Place Unloaded | Any | At the named destination, once unloaded | Seller | Not required | Seller | Buyer |
| DDP | Delivered Duty Paid | Any | At the named destination, ready for unloading and cleared for import | Seller | Not required | Seller | Seller |
| FAS | Free Alongside Ship | Sea / inland waterway | When goods are placed alongside the vessel at the port of loading | Buyer | Not required | Seller | Buyer |
| FOB | Free On Board | Sea / inland waterway | When goods are on board the vessel at the port of loading | Buyer | Not required | Seller | Buyer |
| CFR | Cost and Freight | Sea / inland waterway | When goods are on board the vessel at the port of loading | Seller | Not required | Seller | Buyer |
| CIF | Cost, Insurance and Freight | Sea / inland waterway | When goods are on board the vessel at the port of loading | Seller | Seller, minimum cover (ICC C) | Seller | Buyer |
This is a simplified summary for planning. It is not legal advice. Always name the exact place or port after the rule, for example “FCA Shanghai warehouse, Incoterms 2020”, and check the full ICC rules for your contract. Incoterms® is a registered trademark of the International Chamber of Commerce.
Choosing the right rule.
Some practical guidance from the shipments we handle.
Containers? Use FCA, not FOB.
Containerised cargo is handed over at a terminal, not loaded on board by the seller. FCA, CPT and CIP match how containers actually move.
EXW can create problems for the buyer.
The buyer handles export clearance in the seller’s country, which is often impractical. FCA at the seller’s premises is usually the better choice.
DDP puts all the duty on the seller.
The seller has to clear import and pay duties and taxes in the buyer’s country. Check that you can legally do this before agreeing to it.
DPU replaced DAT.
In 2020, DAT was renamed DPU and can now apply at any place, not only a terminal. It is the only rule where the seller unloads.
CIP now requires more cover.
Under CIP the seller must insure at all-risks level (ICC A). CIF still requires only minimum cover (ICC C) unless agreed otherwise.
Risk and cost can split.
With the C rules, the seller pays freight to destination, but risk passes to the buyer at origin. Arrange insurance with that in mind.