ICC RULES · 2020 EDITION

Incoterms 2020, at the point where cost meets risk

Eleven trade terms, one question each answers differently: at what point does the shipment stop being the seller's problem and become the buyer's? Use this as a working reference when you're quoting, negotiating, or reading a contract of sale.

Seller pays / arranges
Buyer pays / arranges
Open to negotiation between the parties

⟵ scroll to see all 11 terms ⟶

Payment structure Freight collect : buyer arranges and pays main carriage Freight prepaid : seller arranges and pays main carriage
Transport mode Any mode of transport Sea & inland waterway only Any mode of transport
Incoterm EXWEx Works (named place) FCAFree Carrier (named place) FASFree Alongside Ship (named port) FOBFree On Board (named port) CFRCost and Freight (named port) CIFCost, Insurance & Freight (named port) CPTCarriage Paid To (named place) CIPCarriage & Insurance Paid To (named place) DAPDelivered At Place (named place) DPUDelivered At Place Unloaded (named place) DDPDelivered Duty Paid (named place)
Risk transfers to buyer At buyer's disposal, seller's premises Once handed to buyer's carrier Alongside the vessel Once loaded on board Once loaded on board Once loaded on board Once handed to first carrier Once handed to first carrier On arrival, ready to unload After unloading at destination On arrival, ready to unload
Origin-side obligations
Export packaging SellerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Loading charges BuyerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Delivery to port / place BuyerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Export duty, taxes & customs clearance BuyerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Origin terminal charges BuyerBuyerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Loading on carriage BuyerBuyerBuyerSellerSellerSellerSellerSellerSellerSellerSeller
Main carriage
Carriage charges BuyerBuyerBuyerBuyerSellerSellerSellerSellerSellerSellerSeller
Insurance NegotiableNegotiableNegotiableNegotiableNegotiableSeller1NegotiableSeller2NegotiableNegotiableNegotiable
Destination-side obligations
Destination terminal charges BuyerBuyerBuyerBuyerBuyerBuyerBuyerBuyerSellerSellerSeller
Delivery to final destination BuyerBuyerBuyerBuyerBuyerBuyerBuyerBuyerSellerSellerSeller
Unloading at destination BuyerBuyerBuyerBuyerBuyerBuyerBuyerBuyerBuyerSellerSeller
Import duty, taxes & customs clearance BuyerBuyerBuyerBuyerBuyerBuyerBuyerBuyerBuyerBuyerSeller

1 : Under CIF, the seller's insurance only has to meet Institute Cargo Clause (C) : minimum cover, a limited list of insured risks, subject to itemised exclusions.

2 : Under CIP, the seller's insurance must meet Institute Cargo Clause (A) : all-risk cover, subject to itemised exclusions. This is a higher standard than CIF's.

Choosing between EXW and FCA

EXW puts almost everything on the buyer, including export clearance : which many buyers can't legally handle from abroad. FCA is usually the more workable "seller does the minimum" term for cross-border trade.

FOB, CFR & CIF are sea-only

These three (plus FAS) only work for sea and inland waterway shipments, because risk transfers at the ship's rail or once cargo is alongside it. For containerised or multimodal cargo, use FCA, CPT or CIP instead.

DDP is maximum seller obligation

The seller carries cost and risk the whole way, including destination import duty and clearance. It's convenient for the buyer but leaves the seller exposed to foreign customs rules they don't control.