| Term | Full Name | Risk Transfers At | Who Pays Main Freight | Export Customs | Import Customs | Insurance |
|---|---|---|---|---|---|---|
| EXW Any | Ex Works | Seller's premises | Buyer | Buyer | Buyer | Buyer's option |
| FCA Any | Free Carrier | Named place / carrier | Buyer | Seller | Buyer | Buyer's option |
| CPT Any | Carriage Paid To | First carrier handover | Seller | Seller | Buyer | Buyer's option |
| CIP Any | Carriage & Insurance Paid To | First carrier handover | Seller | Seller | Buyer | Seller (Institute A — all risks) |
| DAP Any | Delivered at Place | Named destination, ready to unload | Seller | Seller | Buyer | Seller's option |
| DPU Any | Delivered at Place Unloaded | Named destination, after unloading | Seller | Seller | Buyer | Seller's option |
| DDP Any | Delivered Duty Paid | Named destination, duty paid | Seller | Seller | Seller | Seller's option |
| Term | Full Name | Risk Transfers At | Who Pays Main Freight | Export Customs | Import Customs | Insurance |
|---|---|---|---|---|---|---|
| FAS Sea | Free Alongside Ship | Alongside vessel at port of loading | Buyer | Seller | Buyer | Buyer's option |
| FOB Sea | Free on Board | On board vessel at port of loading | Buyer | Seller | Buyer | Buyer's option |
| CFR Sea | Cost & Freight | On board vessel at port of loading | Seller | Seller | Buyer | Buyer's option |
| CIF Sea | Cost, Insurance & Freight | On board vessel at port of loading | Seller | Seller | Buyer | Seller (Institute C — minimum cover) |
📦 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.