Incoterms 2020 Guide
Incoterms (International Commercial Terms) define who is responsible for costs, risks, and tasks during international shipment.
What Are Incoterms?
Published by the International Chamber of Commerce (ICC), Incoterms are standardized three-letter codes that specify:
- Who pays for transport
- Who pays for insurance
- Where risk transfers from seller to buyer
- Who handles customs clearance
The 11 Incoterms 2020
Any Transport Mode
| Code | Name | Risk Transfer Point | Seller Pays For |
|---|---|---|---|
| EXW | Ex Works | Seller's premises | Nothing beyond making goods available |
| FCA | Free Carrier | Named place/carrier | Delivery to carrier at named place |
| CPT | Carriage Paid To | Named place of delivery | Transport to destination |
| CIP | Carriage and Insurance Paid To | Named place of delivery | Transport + insurance to destination |
| DAP | Delivered at Place | Named destination | Transport to destination (not unloaded) |
| DPU | Delivered at Place Unloaded | Named destination | Transport + unloading at destination |
| DDP | Delivered Duty Paid | Named destination | Everything including import duty |
Sea and Inland Waterway Only
| Code | Name | Risk Transfer Point | Seller Pays For |
|---|---|---|---|
| FAS | Free Alongside Ship | Alongside vessel at port | Delivery alongside ship |
| FOB | Free on Board | On board vessel at port | Loading onto ship |
| CFR | Cost and Freight | On board vessel at port | Transport to destination port |
| CIF | Cost, Insurance and Freight | On board vessel at port | Transport + insurance to destination port |
Most Common for Trade
| Scenario | Recommended |
|---|---|
| Buyer arranges everything | EXW |
| Sea freight, buyer handles shipping | FOB |
| Sea freight, seller handles shipping | CIF |
| Door-to-door, seller handles everything | DDP |
| Air/road freight | FCA or DAP |
Klervex Validation
Klervex validates that:
- Sea-only Incoterms (FAS, FOB, CFR, CIF) are only used with sea transport
- The Incoterm code is one of the 11 valid 2020 codes