Incoterms 2020
| Code | Transfer of risk | Who pays / arranges… | Notes |
|---|---|---|---|
| EXW – Ex Works | Buyer collects at seller’s gate | Buyer: export, main freight, insurance, import | Minimum seller obligation; tricky for cross-border VAT/export docs. |
| FCA – Free Carrier | When goods handed to first carrier (named place) | Buyer: main freight & beyond | Best all-mode alternative to FOB; works for containers. |
| FAS – Free Alongside Ship | Cargo placed quay-side, port of loading | Buyer: ocean freight, stowage, import | Bulk cargo only; export cleared. |
| FOB – Free On Board | Crossing ship’s rail, loading port | Buyer: ocean freight, insurance, import | Use only for non-container sea loads (bulk, break-bulk). |
| CFR – Cost & Freight | Same as FOB for risk; Seller books freight to destination | Seller: ocean freight · Buyer: insurance, import | Risk shifts at load port, even though seller pays freight. |
| CIF – Cost, Insurance & Freight | As CFR, but seller also buys minimum marine insurance | Seller: freight + 110 % min. cover | Classic minerals term; buyer may top-up insurance. |
| CPT – Carriage Paid To | Seller hands to first carrier, but pays through named destination | Seller: main freight · Buyer: insurance, import | All modes; risk passes far earlier than cost. |
| CIP – Carriage & Insurance Paid To | Same risk point as CPT | Seller: freight + high-level cargo insurance (ICC A) | Good for high-value air/ocean container loads. |
| DAP – Delivered At Place | On arrival, ready for unloading | Seller: door freight · Buyer: import clearance, duties | Easiest “door-to-door” without duty risk for seller. |
| DPU – Delivered & Unloaded | After unloading at named place | Seller: freight + unloading | Replaces DAT; seller bears crane/warehouse lift cost. |
| DDP – Delivered Duty Paid | After import cleared, ready for unloading | Seller: everything, incl. duty/VAT | Max seller burden; watch local tax registration requirements. |
Quick rules of thumb
Use FCA/CPT/CIP for containerised or multimodal cargo.
Choose CIF/CFR/FOB/FAS only for traditional sea or river bulk.
“Cost paid ≠ risk passed” – under CPT/CIP/CFR/CIF, risk transfers much earlier than cost.
Always name exact place/port (e.g., “CIF Jebel Ali Port, Berth 5”).
Incoterms cover delivery costs & risk only – payment terms (LC, CAD) sit in the contract, not in Incoterms.