Guide
Incoterms 2020 guide
Incoterms® define who — buyer or seller — bears the costs and risks at each step of an international shipment.
Published by the International Chamber of Commerce (ICC), Incoterms 2020 comprise 11 rules. Seven apply to any transport mode, four are reserved for sea and inland waterway transport. They don't replace a sales contract: they clarify its logistics obligations.
What Incoterms define
- How transport costs are split
- The point where risk transfers
- Who arranges the main carriage
- Insurance (depending on the rule)
- Export and import formalities
The 11 Incoterms 2020
| Code | Meaning | Modes | Risk transfer |
|---|---|---|---|
| EXW | Ex Works | All modes | Risk transfers to the buyer once goods are made available at the seller's premises. |
| FCA | Free Carrier | All modes | Risk transfers when goods are handed to the carrier named by the buyer. |
| CPT | Carriage Paid To | All modes | Seller pays main carriage; risk transfers when goods reach the first carrier. |
| CIP | Carriage and Insurance Paid To | All modes | Like CPT, with all-risk insurance (ICC A) taken out by the seller. |
| DAP | Delivered At Place | All modes | Risk transfers on arrival, goods ready to be unloaded by the buyer. |
| DPU | Delivered at Place Unloaded | All modes | The only Incoterm requiring the seller to unload the goods at destination. |
| DDP | Delivered Duty Paid | All modes | Seller bears everything, including import duties and taxes. |
| FAS | Free Alongside Ship | Sea / waterway | Risk transfers when goods are placed alongside the vessel at the origin port. |
| FOB | Free On Board | Sea / waterway | Risk transfers once goods are loaded on board the vessel. |
| CFR | Cost and Freight | Sea / waterway | Seller pays sea freight; risk transfers on loading on board. |
| CIF | Cost, Insurance and Freight | Sea / waterway | Like CFR, with minimum insurance (ICC C) taken out by the seller. |
Incoterms® is a registered trademark of the International Chamber of Commerce. This guide is informational; refer to the official ICC 2020 text for your contracts.
Frequently asked questions
What's the difference between CIF and CIP?
Both include seller-purchased insurance. CIF (sea) requires minimum cover (ICC C), while CIP (any mode) requires extended cover (ICC A).
What changed in 2020?
DPU (Delivered at Place Unloaded) replaced DAT, and CIP now requires all-risk insurance. FCA also allows an on-board bill of lading.
Is an Incoterm enough to secure a sale?
No. The Incoterm clarifies logistics, but the sales contract is still needed for price, payment, ownership and governing law.
Related resources
Structure your shipments
Set the Incoterm from the order and keep it across the whole dossier.