Incoterms and shipping
Incoterms 2020
Definition
The ICC's eleven standard trade terms that set who pays for and bears the risk of each step of delivery.
Incoterms are published by the International Chamber of Commerce (ICC). The 2020 edition has eleven rules. Seven can be used for any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU and DDP. Four are only for sea and inland waterway transport: FAS, FOB, CFR and CIF.
Each rule defines where delivery happens, when risk passes from seller to buyer, and who pays for carriage, insurance and export and import clearance. Incoterms do not decide the price, the payment terms or when ownership of the goods passes. Always name the rule, the place and the edition, for example FCA Ankleshwar, India, Incoterms 2020.
Related terms
- EXW (Ex Works)The seller makes the goods available at its own premises and the buyer handles everything else, including loading and export clearance.
- FCA (Free Carrier)The seller clears the goods for export and hands them to the buyer's carrier at a named place.
- FOB (Free on Board)The seller delivers the goods on board the buyer's vessel at the named port of shipment, cleared for export.
- CIF (Cost, Insurance and Freight)Like CFR, with the seller also buying minimum cargo insurance for the voyage.
- DAP (Delivered at Place)The seller bears costs and risk until the goods arrive at the named destination, ready for unloading.
- DDP (Delivered Duty Paid)The seller delivers to the named destination, cleared for import with duties and taxes paid.