Incoterms 2020

Who is responsible,
and how far?

Incoterms define where cost and risk change hands between buyer and seller. Each card below shows where in the chain the seller's responsibility ends.

Risk with sellerCost with sellerWith buyer

The 11 rules

EXWAny mode of transport

Ex Works

The rule with the least obligation for the seller. The goods are made ready at the seller's premises; everything from that point on, loading included, is for the buyer's account. Because export clearance is also the buyer's responsibility, the rule can be problematic for buyers not established in the exporter's country; in such cases the ICC recommends using FCA.

Transfer of risk: Risk passes to the buyer when the goods are placed at the buyer's disposal at the seller's premises (factory, warehouse, workshop); the seller has no obligation to load the goods onto the collecting vehicle.
Freight: Buyer
Insurance: Not obligatory for either party; since risk lies with the buyer from the outset, in practice the buyer arranges it.
Export customs: Buyer
Import customs: Buyer

FCAAny mode of transport

Free Carrier

FCA is EXW with the export clearance problem solved: the seller handles the export formalities and risk passes to the buyer once the goods are handed over to the carrier. It is the rule the ICC recommends instead of FOB for containerised cargo. Incoterms 2020 added an option under which, in letter of credit transactions, the buyer may instruct the carrier to issue a bill of lading bearing an on-board notation and provide it to the seller.

Transfer of risk: Risk passes to the buyer when the goods are delivered to the carrier nominated by the buyer at the named place (if that place is the seller's premises, on loading onto the collecting vehicle; if elsewhere, when placed ready for unloading on the seller's arriving vehicle).
Freight: Buyer (the buyer contracts and pays for the main carriage)
Insurance: Not obligatory; in practice the buyer arranges it.
Export customs: Seller
Import customs: Buyer

CPTAny mode of transport

Carriage Paid To

The seller pays the freight up to the place of destination, but risk passes to the buyer much earlier — on delivery to the first carrier. The split between the risk point and the cost point is the most commonly misunderstood aspect of this rule. Both the place of delivery and the place of destination should be stated separately in the contract.

Transfer of risk: Risk passes to the buyer when the goods are delivered to the first carrier contracted by the seller — not at the place of destination.
Freight: Seller (up to the named place of destination)
Insurance: Not obligatory; since the risk during carriage lies with the buyer, in practice the buyer arranges it.
Export customs: Seller
Import customs: Buyer

CIPAny mode of transport

Carriage and Insurance Paid To

CIP is CPT with insurance. The seller pays the freight and takes out cargo insurance in the buyer's favour, but risk still passes to the buyer on delivery to the first carrier. One of the most important changes in Incoterms 2020 is the increase of the minimum insurance level under CIP from ICC (C) to ICC (A).

Transfer of risk: Risk passes to the buyer when the goods are delivered to the first carrier — not at the place of destination.
Freight: Seller (up to the named place of destination)
Insurance: Seller. Incoterms 2020 set the minimum cover at Institute Cargo Clauses (A) (wide cover / all risks); the sum insured is 110% of the contract price.
Export customs: Seller
Import customs: Buyer

DAPAny mode of transport

Delivered at Place

The seller brings the goods to the address named by the buyer but does not unload them and does not clear them for import. Damage occurring during unloading is at the buyer's risk. It is one of the most widely used rules in door-to-door road transport.

Transfer of risk: Risk passes to the buyer when the goods are placed at the buyer's disposal at the named place of destination, ready for unloading on the arriving means of transport; unloading is for the buyer's account.
Freight: Seller (up to the named place of destination)
Insurance: Not obligatory; since risk remains with the seller until arrival, in practice the seller arranges it.
Export customs: Seller
Import customs: Buyer (import duties and taxes are also for the buyer's account)

DPUAny mode of transport

Delivered at Place Unloaded

The only Incoterms rule under which the seller is obliged to unload the goods at the place of destination. It replaced the DAT (Delivered at Terminal) rule of Incoterms 2010; the place of delivery need no longer be a terminal but may be any place. The seller must make sure that unloading is possible at the place of destination.

Transfer of risk: Risk passes to the buyer once the goods have been unloaded from the means of transport at the named place of destination.
Freight: Seller (up to the named place of destination; unloading costs also for the seller's account)
Insurance: Not obligatory; since risk remains with the seller until unloading, in practice the seller arranges it.
Export customs: Seller
Import customs: Buyer

DDPAny mode of transport

Delivered Duty Paid

The rule with the greatest obligation for the seller: all export, transit and import customs formalities, together with duties and taxes, are for the seller's account. The seller must be able to act as importer in the country of destination; since this is not possible for non-established companies in many countries, DDP should be used with care. Unloading, as under DAP, is for the buyer's account.

Transfer of risk: Risk passes to the buyer when the goods, cleared for import, are placed at the buyer's disposal at the named place of destination, ready for unloading on the arriving means of transport; unloading is for the buyer's account.
Freight: Seller (up to the named place of destination)
Insurance: Not obligatory; since risk remains with the seller until arrival, in practice the seller arranges it.
Export customs: Seller
Import customs: Seller (including import duties, taxes and VAT)

FASSea and inland waterway transport

Free Alongside Ship

The cost and risk of loading on board are for the buyer's account. The rule is used for conventional sea cargo such as bulk goods, ores and grain. It is not suitable for containerised transport — because a container is handed over at the terminal and not alongside the vessel, FCA should be preferred.

Transfer of risk: Risk passes to the buyer when the goods are placed alongside the vessel nominated by the buyer (on the quay or on a barge) at the named port of shipment.
Freight: Buyer
Insurance: Not obligatory; in practice the buyer arranges it.
Export customs: Seller
Import customs: Buyer

FOBSea and inland waterway transport

Free On Board

The best known rule in sea transport: the seller loads the goods on board and clears them for export, while the buyer pays the freight. It is for sea and inland waterway transport only. For containerised cargo, where the goods are handed over at the terminal rather than on board, the ICC recommends FCA instead of FOB.

Transfer of risk: Risk passes to the buyer when the goods are loaded on board the vessel nominated by the buyer (placed on board) at the named port of shipment.
Freight: Buyer
Insurance: Not obligatory; in practice the buyer arranges it.
Export customs: Seller
Import customs: Buyer

CFRSea and inland waterway transport

Cost and Freight

The seller pays the freight up to the port of destination, but risk passes to the buyer on loading on board at the port of shipment. Damage during the sea voyage is therefore at the buyer's risk. The split between the risk point and the cost point is the most critical aspect of this rule. It is for sea and inland waterway transport only.

Transfer of risk: Risk passes to the buyer when the goods are loaded on board the vessel at the port of shipment — not at the port of destination.
Freight: Seller (up to the named port of destination)
Insurance: Not obligatory; since the risk of the sea voyage lies with the buyer, in practice the buyer arranges it.
Export customs: Seller
Import customs: Buyer

CIFSea and inland waterway transport

Cost, Insurance and Freight

CIF is CFR with insurance. The seller bears the freight and minimum cargo insurance, while risk still passes to the buyer on loading on board. Since the minimum cover under CIF remains at ICC (C), a buyer wanting wider cover must agree it separately in the contract. It is for sea and inland waterway transport only.

Transfer of risk: Risk passes to the buyer when the goods are loaded on board the vessel at the port of shipment — not at the port of destination.
Freight: Seller (up to the named port of destination)
Insurance: Seller. The minimum cover is Institute Cargo Clauses (C) (a limited set of named risks), a level retained in Incoterms 2020; the sum insured is 110% of the contract price.
Export customs: Seller
Import customs: Buyer

The diagrams are for quick comparison. What binds is the contract between the parties and the full text of the ICC Incoterms® 2020 rules. Always state the place of delivery explicitly in the contract: “FCA İzmir Port”, for example.

Compare two rules

Pick two terms below and see their cost and risk chains one under the other.

First

Second

What changed from 2010 to 2020?

The DAT (Delivered at Terminal) rule was removed and replaced by DPU (Delivered at Place Unloaded). The requirement that the place of delivery be a 'terminal' was dropped; the place of destination may be any place. (ICC)
The minimum insurance cover the seller must provide under CIP was raised from Institute Cargo Clauses (C) to Institute Cargo Clauses (A) (wide cover/all risks). Under CIF the minimum was kept at ICC (C). (ICC)
An optional provision was added to FCA allowing the buyer, in sea shipments under a letter of credit, to instruct the carrier to issue a bill of lading bearing an on-board notation and provide it to the seller. (ICC)
All costs under each rule were gathered in one place, in articles A9/B9, so the parties can see in a single article which costs fall on whom. (ICC)
Transport-related security obligations were set out more clearly and in more detail in articles A4 and A7. (ICC)
Under the FCA, DAP, DPU and DDP rules it was expressly recognised that the goods may be carried by the parties' own means of transport without using a third-party carrier. (Kuehne+Nagel)
User guidance was strengthened: the 2010 'Guidance Notes' were replaced by more detailed 'Explanatory Notes for Users' and illustrations for each rule. (Livingston International)

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Who is responsible,and how far?