All 11 Incoterms 2020 rules in plain English, with a quick-reference table for risk transfer, freight cost, insurance and customs clearance.
Incoterms® are the International Chamber of Commerce's standard trade terms, used worldwide to define exactly where a seller's responsibility ends and a buyer's begins in an international shipment. The 2020 edition, in force since 1 January 2020, sets out 11 rules covering who pays for freight and insurance, where risk transfers from seller to buyer, and who handles export and import customs clearance.
Incoterms do not decide who owns the goods, set the price, or replace a sale contract. They only allocate cost, risk and logistics responsibility, three letters on a purchase order that can mean the difference between a smooth delivery and an unexpected duty bill or a shipment stuck at the border.
All 11 rules side by side: transport mode, where risk transfers, and who arranges freight, insurance and customs clearance.
| Term | Mode | Risk Transfers At | Freight | Insurance | Export Clearance | Import Clearance |
|---|---|---|---|---|---|---|
| EXW | Any | Seller's premises | Buyer | Buyer | Buyer | Buyer |
| FCA | Any | Handover to carrier | Buyer | Buyer | Seller | Buyer |
| CPT | Any | Handover to first carrier | Seller | Buyer | Seller | Buyer |
| CIP | Any | Handover to first carrier | Seller | Seller (all-risk) | Seller | Buyer |
| DAP | Any | Named destination, before unloading | Seller | Buyer | Seller | Buyer |
| DPU | Any | Named destination, after unloading | Seller | Buyer | Seller | Buyer |
| DDP | Any | Named destination | Seller | Buyer | Seller | Seller |
| FAS | Sea / waterway | Alongside vessel | Buyer | Buyer | Seller | Buyer |
| FOB | Sea / waterway | On board vessel | Buyer | Buyer | Seller | Buyer |
| CFR | Sea / waterway | On board vessel, at origin | Seller | Buyer | Seller | Buyer |
| CIF | Sea / waterway | On board vessel, at origin | Seller | Seller (minimum cover) | Seller | Buyer |
Seven Incoterms that work for road, rail, air, sea or any combination, including multimodal shipments.
The seller makes the goods available at their own premises, factory or warehouse. From that point, the buyer bears all costs and risks, including loading, export clearance and the entire transport. This is the minimum obligation for the seller and the maximum for the buyer.
The seller delivers the goods, cleared for export, to a carrier or other person nominated by the buyer, either at the seller's premises or another named place. Risk transfers once the goods are handed to that carrier.
The seller pays for carriage to the named destination, but risk transfers to the buyer as soon as the goods are handed to the first carrier, not when they arrive. The seller clears the goods for export.
Identical to CPT, except the seller must also insure the goods for the full transport, at the higher Institute Cargo Clauses (A) level, an "all risks" minimum introduced by Incoterms 2020.
The seller delivers when the goods are placed at the buyer's disposal at the named destination, ready for unloading. The seller bears all costs and risks to that point, but the buyer handles import clearance and duties.
Replaces the old DAT (Delivered at Terminal) from Incoterms 2010. The seller delivers once the goods, unloaded from the arriving transport, are placed at the buyer's disposal at the named place, the only Incoterm requiring the seller to unload.
Maximum obligation for the seller. The seller delivers the goods cleared for import, ready for unloading, at the named destination, having paid all costs including import duties and taxes. The buyer only needs to unload.
Four Incoterms specific to sea and inland waterway shipments, built around a vessel and a port.
The seller delivers when the goods are placed alongside the vessel, for example on a quay, at the named port of shipment. The buyer bears all costs and risks from that point, including loading onto the vessel. Used mainly for bulk and break-bulk cargo.
The seller delivers when the goods are loaded on board the vessel nominated by the buyer at the named port of shipment. Risk transfers once the goods are on board. One of the most widely used Incoterms, though the ICC recommends FCA instead for containerized cargo.
The seller pays freight to the named port of destination, but risk transfers once the goods are on board the vessel at the port of shipment, the same risk point as FOB. The buyer arranges insurance.
Identical to CFR, but the seller must also provide insurance, at the minimum Institute Cargo Clauses (C) level, a lower bar than CIP's all-risk requirement. One of the most common terms in commodity and bulk trading.
The Incoterm on your contract decides who needs a customs and logistics partner in Rotterdam, and when. Under EXW, FCA, FAS, FOB, CFR or CIF, the buyer is responsible for import formalities, and routing cargo into a bonded warehouse near the port lets duty and import VAT stay suspended until the goods are actually sold or moved onward. Under DAP or DPU, the seller delivers to a named place, but the buyer still handles import clearance, again a natural fit for bonded storage.
Only DDP shifts import clearance itself onto the seller, which typically means the seller needs a fiscal representative or customs broker established in the Netherlands, such as Article 23 fiscal representation. Whichever term is on your contract, our Type A bonded warehouse in Hellevoetsluis handles clearance in-house, whether you are the buyer taking delivery under FOB or CIF, or the seller covering DDP into the EU.
There is no single "best" Incoterm, only the right fit for who wants control, who wants convenience, and how the cargo actually moves.
Want maximum control as the buyer: EXW or FCA put you in charge of freight, insurance and export formalities from the earliest possible point.
Shipping FCL by sea on standard, bank-friendly terms: FOB and CIF remain the market default for commodity and bulk trade, widely understood by banks issuing letters of credit.
Selling a turnkey shipment into the EU: DDP gives the buyer a fixed landed cost, but only works smoothly with a local fiscal representative handling import VAT and duties on your behalf.
Shipping in containers: avoid FOB, CFR and CIF where possible. The ICC recommends FCA, CPT or CIP instead, since risk transferring "on board" does not match how containers are actually handed over at a terminal before loading.
Tell us the Incoterm on your contract and we'll size bonded storage, customs clearance and transport around it.
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