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Who pays, who carries the risk, and where it changes.
All 11 Incoterms® 2020 rules in plain English. Choosing the wrong one is one of the most common, and most expensive, mistakes in international trade.
Seven rules that work for sea, air, road and rail
Use these for containerised cargo too. The ICC recommends FCA rather than FOB for containers.
| Rule | Name | Risk passes to buyer | Main freight paid by | Insurance | Import duties |
|---|---|---|---|---|---|
| EXW | Ex Works | At seller's premises, when goods are made available | Buyer | Buyer's choice | Buyer |
| FCA | Free Carrier | On handover to buyer's carrier at the named place | Buyer | Buyer's choice | Buyer |
| CPT | Carriage Paid To | On handover to the first carrier | Seller | Buyer's choice | Buyer |
| CIP | Carriage & Insurance Paid To | On handover to the first carrier | Seller | Seller all-risks (ICC A) | Buyer |
| DAP | Delivered At Place | At destination, ready for unloading | Seller | Seller's choice | Buyer |
| DPU | Delivered at Place Unloaded | At destination, after unloading | Seller | Seller's choice | Buyer |
| DDP | Delivered Duty Paid | At destination, ready for unloading | Seller | Seller's choice | Seller |
Four rules for port-to-port sea freight
Best suited to bulk and break-bulk cargo loaded directly onto the vessel.
| Rule | Name | Risk passes to buyer | Main freight paid by | Insurance | Import duties |
|---|---|---|---|---|---|
| FAS | Free Alongside Ship | Alongside the vessel at the port of shipment | Buyer | Buyer's choice | Buyer |
| FOB | Free On Board | On board the vessel at the port of shipment | Buyer | Buyer's choice | Buyer |
| CFR | Cost and Freight | On board the vessel at the port of shipment | Seller | Buyer's choice | Buyer |
| CIF | Cost, Insurance & Freight | On board the vessel at the port of shipment | Seller | Seller minimum (ICC C) | Buyer |
Export clearance is the seller's responsibility under every rule except EXW. Incoterms® is a registered trademark of the International Chamber of Commerce. This guide is a summary; refer to the ICC publication for the full rules.
Incoterms FAQ
What is the difference between FOB and CIF?
Under both FOB and CIF, risk passes to the buyer once the goods are loaded on board the vessel at the port of shipment. Under CIF the seller also pays the ocean freight and minimum insurance cover to the destination port; under FOB the buyer arranges and pays for both.
Which Incoterms can be used for container shipments?
The ICC recommends FCA, CPT, CIP, DAP, DPU or DDP for containerised cargo, because containers are normally handed to the carrier at a terminal before loading. FOB, CFR, CIF and FAS are intended for bulk or non-containerised sea freight.
What does DDP mean?
Delivered Duty Paid: the seller bears all costs and risks of delivering the goods to the named destination, including import clearance, duties and taxes. It is the maximum obligation for the seller.
Not sure which Incoterm to agree?
Tell us about the deal. We will recommend the rule that protects your margin and your cargo.
A general summary for education, not legal advice. The official ICC text of Incoterms® 2020 and your contract prevail. Legal disclaimer