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Incoterms 2020

What are Incoterms? Incoterms® (International Commercial Terms) are a set of standardised trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international trade transactions — covering delivery, risk, insurance and costs. The current version is Incoterms 2020, in force since 1 January 2020. There are 11 terms: 7 apply to any mode of transport, and 4 are specific to sea and inland waterway transport.
Risk & Cost Responsibility — Seller vs Buyer
Shows the approximate split of responsibility from origin to destination. Risk and cost transfer at the named point.
Seller's responsibility
Buyer's responsibility
EXWEx Works
Buyer collects from seller's premises — buyer arranges everything
FCAFree Carrier
To carrier
From named place / carrier handover
FASFree Alongside Ship
To port
From alongside vessel at loading port
FOBFree on Board
To vessel
From on board vessel at loading port
CFRCost & Freight
Pays freight
Risk still transfers on board at loading port — buyer arranges insurance
CPTCarriage Paid To
Pays freight
Risk transfers at first carrier handover — buyer arranges insurance
CIFCost, Insurance & Freight
Freight + min. insurance
Risk still transfers on board at loading port
CIPCarriage & Insurance Paid To
Freight + all-risks insurance
Risk transfers at first carrier handover
DAPDelivered at Place
Seller delivers to named destination — unloading by buyer
Import & unload
DPUDelivered at Place Unloaded
Seller delivers and unloads at named destination
Import duties
DDPDelivered Duty Paid
Seller responsible for everything including import duties
⚠️ Important note on C-terms (CFR, CIF, CPT, CIP): Under all four C-terms the seller pays the freight to destination, but risk transfers to the buyer at origin (on board vessel for CFR/CIF, or at first carrier handover for CPT/CIP). This split between cost and risk is the most commonly misunderstood aspect of Incoterms.
Any Mode of Transport — Air, Road, Rail or Sea
👈 Swipe left to see all columns
TermFull NameRisk Transfers AtWho Pays Main FreightExport CustomsImport CustomsInsurance
EXW AnyEx WorksSeller's premisesBuyerBuyerBuyerBuyer's option
FCA AnyFree CarrierNamed place / carrierBuyerSellerBuyerBuyer's option
CPT AnyCarriage Paid ToFirst carrier handoverSellerSellerBuyerBuyer's option
CIP AnyCarriage & Insurance Paid ToFirst carrier handoverSellerSellerBuyerSeller (Institute A — all risks)
DAP AnyDelivered at PlaceNamed destination, ready to unloadSellerSellerBuyerSeller's option
DPU AnyDelivered at Place UnloadedNamed destination, after unloadingSellerSellerBuyerSeller's option
DDP AnyDelivered Duty PaidNamed destination, duty paidSellerSellerSellerSeller's option
Sea & Inland Waterway Only — Not suitable for containerised cargo
👈 Swipe left to see all columns
TermFull NameRisk Transfers AtWho Pays Main FreightExport CustomsImport CustomsInsurance
FAS SeaFree Alongside ShipAlongside vessel at port of loadingBuyerSellerBuyerBuyer's option
FOB SeaFree on BoardOn board vessel at port of loadingBuyerSellerBuyerBuyer's option
CFR SeaCost & FreightOn board vessel at port of loadingSellerSellerBuyerBuyer's option
CIF SeaCost, Insurance & FreightOn board vessel at port of loadingSellerSellerBuyerSeller (Institute C — minimum cover)
Key Points & Practical Notes

📦 FOB vs FCA for Containers

FOB is widely used but technically incorrect for containerised cargo — risk transfers at the port gate, not on board. FCA (named seller's premises or CFS) is the correct term for container shipments. Many traders use FOB by habit; it's worth understanding the difference.

🛡️ CIF vs CIP Insurance

Under CIF, the seller only needs to arrange minimum cover (Institute Cargo Clauses C). Under CIP (Incoterms 2020 update), the seller must arrange Institute Clauses A — all-risks cover. This is a significant difference worth noting in contracts.

⚠️ DDP Risks for Sellers

DDP places maximum obligation on the seller, including import duties and taxes in the buyer's country. Sellers unfamiliar with destination customs procedures should be cautious. VAT and GST registration requirements can make DDP very complex.

🆕 DPU — New in 2020

DPU (Delivered at Place Unloaded) replaced DAT (Delivered at Terminal) in Incoterms 2020. It is the only term where the seller is responsible for unloading at the destination — at any named place, not just a terminal.

📝 Which Term to Use?

For imports where your client controls the freight: EXW or FCA. For exports where you control freight to destination: DAP, DPU or DDP. For standard ocean freight where buyer arranges: FOB (loose cargo) or FCA (containers). Always specify the named place clearly.

🌍 Incoterms vs Domestic Law

Incoterms define delivery, risk and cost allocation — they do not determine ownership or title transfer, which is governed by the applicable sales contract law. Always use Incoterms alongside a properly drafted sales contract.

Disclaimer: This guide is provided for general reference only. Incoterms® is a registered trademark of the International Chamber of Commerce. Always refer to the official ICC Incoterms 2020 publication for authoritative guidance and consult your legal or trade advisor for specific transactions. NetworkZone accepts no liability for decisions based on this reference.
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