Incoterms 2020 Rules: Defining Global Trade Responsibilities

Incoterms Defining Seller and Buyer Obligations

E-Terms: Departure

EXW (Ex Works)

The seller fulfills their obligation when they place the goods at their premises (e.g., warehouse or factory). The buyer assumes all subsequent costs and risks from that point.

• Risk Transferred: Seller's factory door.
• Cost Transferred: Seller's factory door.
• Mode of Transport: Any mode.
• Seller Obligations: None regarding export clearance or loading (unless agreed otherwise).

F-Terms: Main Carriage Unpaid

FCA (Free Carrier)

The seller fulfills their obligation when they deliver the goods to the carrier nominated by the buyer, through customs, at the agreed point. The seller bears risks and costs up to the point the goods are loaded.

If delivery occurs at the seller's property, the seller is responsible for loading the goods onto the buyer's transport.

• Risk Transferred: Principal carrier at the agreed point.
• Cost Transferred: Principal carrier at the agreed point.
• Mode of Transport: Sea, Air, or Land (Any mode).
• Seller Obligations: Export customs clearance + Loading (if delivery is at seller's premises).

FAS (Free Alongside Ship)

The seller assumes costs and risks until the goods are placed alongside the vessel at the named port of shipment. From this point, the buyer assumes responsibility. The seller is responsible for export customs clearance.

• Risk Transferred: Alongside the ship.
• Cost Transferred: Alongside the ship.
• Mode of Transport: Sea and Inland Waterway Transport only.
• Seller Obligations: Export customs clearance.

FOB (Free On Board)

The seller fulfills their obligation when the goods are placed on board the vessel at the named port of shipment. The seller is responsible for export customs clearance and loading costs, but does not pay for the main transportation costs (freight).

• Risk Transferred: Goods placed on board the vessel.
• Cost Transferred: Goods placed on board the vessel.
• Mode of Transport: Sea and Inland Waterway Transport only.
• Seller Obligations: Export customs clearance + Loading.

C-Terms: Main Carriage Paid

CFR (Cost and Freight)

The seller fulfills their obligation when the goods are placed on board the vessel. The seller pays the costs necessary to bring the goods to the named port of destination, but the risk transfers earlier.

Note: Insurance is not included in the seller's responsibility.

• Risk Transferred: Goods placed on board the vessel (at the port of shipment).
• Cost Transferred: Port of destination.
• Mode of Transport: Sea and Inland Waterway Transport only.
• Seller Obligations: Export customs clearance + Loading + Freight costs.

CIF (Cost, Insurance and Freight)

The seller fulfills their obligation when the goods are placed on board the vessel. This term is similar to CFR, but the seller must also procure minimum insurance coverage (ICC Clause C) against the buyer's risk of loss or damage during carriage.

The seller pays for freight costs, insurance, and export customs clearance. The seller is also responsible for unloading according to the original agreement.

• Risk Transferred: Goods placed on board the vessel (at the port of shipment).
• Cost Transferred: Port of destination.
• Mode of Transport: Sea and Inland Waterway Transport only.
• Seller Obligations: Export customs clearance + Loading + Freight costs + Insurance.

CPT (Carriage Paid To)

The seller pays the freight costs required to bring the goods to the named place of destination. However, the risk transfers when the goods are delivered to the first carrier.

The seller is responsible for loading the goods onto the main transport but does not pay for insurance or unloading at the destination.

• Risk Transferred: Goods delivered to the first carrier.
• Cost Transferred: Agreed place of destination.
• Mode of Transport: Sea, Air, or Land (Any mode).
• Seller Obligations: Export customs clearance + Loading + Freight costs.

CIP (Carriage Insurance Paid To)

The seller pays the freight costs and procures insurance (ICC Clause A, maximum coverage) required to bring the goods to the named place of destination. The risk transfers when the goods are delivered to the first carrier.

The seller is responsible for loading and, according to this agreement, unloading at the destination.

• Risk Transferred: Goods delivered to the first carrier.
• Cost Transferred: Agreed place of destination.
• Mode of Transport: Sea, Air, or Land (Any mode).
• Seller Obligations: Export customs clearance + Loading + Freight costs + Insurance.

D-Terms: Arrival

DAP (Delivered At Place)

The seller delivers the goods, and transfers risk, when the goods are placed at the disposal of the buyer on the arriving means of transport, ready for unloading at the named place of destination.

The seller bears all risks and costs up to that point, excluding import clearance and duties.

• Risk Transferred: Until destination (ready for unloading).
• Cost Transferred: Final destination.
• Mode of Transport: Any mode.
• Seller Obligations: All costs and risks up to delivery (excluding import duties/unloading).

DPU (Delivered at Place Unloaded) / DAT

The seller delivers the goods, and transfers risk, when the goods, having been unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal or place of destination.

The seller bears all risks and costs up to the point of unloading at the destination.

• Risk Transferred: Until destination (upon unloading).
• Cost Transferred: Final destination.
• Mode of Transport: Any mode.
• Seller Obligations: All costs and risks up to unloading.

DDP (Delivered Duty Paid)

This term represents the maximum obligation for the seller. The seller covers all costs and risks associated with bringing the goods to the named place of destination, including import duties and taxes.

The seller covers everything: shipment, customs, and transport from seller to buyer. The only cost typically excluded from the seller's responsibility is the unloading at the final delivery point.

• Risk Transferred: Agreed delivery point.
• Cost Transferred: Final destination.
• Mode of Transport: Sea, Air, or Land (Any mode).
• Seller Obligations: All costs and risks + Taxes and duties in the importing country.