Incoterms® 2020 Explained

A practical visual guide to the eleven ICC trade terms used to allocate delivery tasks, costs, and risk between seller and buyer.

Introduction

What are Incoterms?

Incoterms are standard trade rules published by the International Chamber of Commerce. They clarify delivery responsibilities, cost allocation, and the point at which risk transfers between seller and buyer.

What are they used for?

They help parties write clearer sales contracts, choose suitable transport arrangements, and reduce ambiguity around delivery, insurance, customs formalities, and risk.

This page is an educational summary and does not replace the official ICC Incoterms® 2020 rule book or professional advice.

Quick Reference

All eleven Incoterms at a glance.

Use these cards as a starting point, then review the detailed responsibilities below.

EXW

Ex Works
Seller makes the goods available at the named place; the buyer takes on most transport tasks and risks from there.

FCA

Free Carrier
Seller delivers export-cleared goods to the buyer’s nominated carrier at the named place.

FAS

Free Alongside Ship
Seller places export-cleared goods alongside the nominated vessel at the port of shipment.

FOB

Free On Board
Seller delivers export-cleared goods on board the nominated vessel at the port of shipment.

CFR

Cost and Freight
Seller pays ocean freight to the named port, while risk transfers when the goods are on board at origin.

CIF

Cost, Insurance and Freight
CFR with seller-provided minimum cargo insurance for the buyer’s risk during sea transport.

CPT

Carriage Paid To
Seller pays carriage to the named destination, but risk transfers when goods are handed to the first carrier.

CIP

Carriage and Insurance Paid To
CPT with seller-arranged cargo insurance at the higher Incoterms 2020 coverage level.

DPU

Delivered at Place Unloaded
Seller bears costs and risks to the named destination and unloads the goods there.

DAP

Delivered at Place
Seller bears costs and risks to the named destination, ready for unloading by the buyer.

DDP

Delivered Duty Paid
Seller carries the broadest obligation, including import clearance and duties, to the named destination.

Comparison

Compare delivery and risk points.

The table remains readable on smaller screens with a dedicated horizontal scroll area.

Rule	Risk transfer	Main carriage	Typical use	Transport
EXWEx Works	At the seller’s named place	Buyer	Domestic or simple collections	Any mode
FCAFree Carrier	When delivered to the carrier	Buyer	Containerised and multimodal freight	Any mode
FASFree Alongside Ship	Alongside the vessel	Buyer	Bulk and breakbulk sea cargo	Sea / inland waterway
FOBFree On Board	When goods are on board	Buyer	Traditional sea freight cargo	Sea / inland waterway
CFRCost and Freight	When goods are on board	Seller	Non-containerised sea freight	Sea / inland waterway
CIFCost, Insurance and Freight	When goods are on board	Seller	Commodity and sea cargo	Sea / inland waterway
CPTCarriage Paid To	At first carrier handover	Seller	Any mode or multimodal freight	Any mode
CIPCarriage and Insurance Paid To	At first carrier handover	Seller	Higher-value multimodal cargo	Any mode
DPUDelivered at Place Unloaded	After unloading at destination	Seller	Project and delivered cargo	Any mode
DAPDelivered at Place	Before unloading at destination	Seller	Door and site delivery	Any mode
DDPDelivered Duty Paid	At named destination	Seller	Fully managed delivered sales	Any mode

Detailed Reference

Explore each Incoterm.

Review the practical focus of each rule before confirming the named place or port in a sales contract.

EXW

Ex Works

Seller makes the goods available at the named place; the buyer takes on most transport tasks and risks from there.

Responsibilities: Main carriage arranged by the buyer under this simplified reference.
Risk Transfer: At the seller’s named place
Suitable For: Domestic or simple collections

FCA

Free Carrier

Seller delivers export-cleared goods to the buyer’s nominated carrier at the named place.

Responsibilities: Main carriage arranged by the buyer under this simplified reference.
Risk Transfer: When delivered to the carrier
Suitable For: Containerised and multimodal freight

FAS

Free Alongside Ship

Seller places export-cleared goods alongside the nominated vessel at the port of shipment.

Responsibilities: Main carriage arranged by the buyer under this simplified reference.
Risk Transfer: Alongside the vessel
Suitable For: Bulk and breakbulk sea cargo

FOB

Free On Board

Seller delivers export-cleared goods on board the nominated vessel at the port of shipment.

Responsibilities: Main carriage arranged by the buyer under this simplified reference.
Risk Transfer: When goods are on board
Suitable For: Traditional sea freight cargo

CFR

Cost and Freight

Seller pays ocean freight to the named port, while risk transfers when the goods are on board at origin.

Responsibilities: Main carriage arranged by the seller under this simplified reference.
Risk Transfer: When goods are on board
Suitable For: Non-containerised sea freight

CIF

Cost, Insurance and Freight

CFR with seller-provided minimum cargo insurance for the buyer’s risk during sea transport.

Responsibilities: Main carriage arranged by the seller under this simplified reference.
Risk Transfer: When goods are on board
Suitable For: Commodity and sea cargo

CPT

Carriage Paid To

Seller pays carriage to the named destination, but risk transfers when goods are handed to the first carrier.

Responsibilities: Main carriage arranged by the seller under this simplified reference.
Risk Transfer: At first carrier handover
Suitable For: Any mode or multimodal freight

CIP

Carriage and Insurance Paid To

CPT with seller-arranged cargo insurance at the higher Incoterms 2020 coverage level.

Responsibilities: Main carriage arranged by the seller under this simplified reference.
Risk Transfer: At first carrier handover
Suitable For: Higher-value multimodal cargo

DPU

Delivered at Place Unloaded

Seller bears costs and risks to the named destination and unloads the goods there.

Responsibilities: Main carriage arranged by the seller under this simplified reference.
Risk Transfer: After unloading at destination
Suitable For: Project and delivered cargo

DAP

Delivered at Place

Seller bears costs and risks to the named destination, ready for unloading by the buyer.

Responsibilities: Main carriage arranged by the seller under this simplified reference.
Risk Transfer: Before unloading at destination
Suitable For: Door and site delivery

DDP

Delivered Duty Paid

Seller carries the broadest obligation, including import clearance and duties, to the named destination.

Responsibilities: Main carriage arranged by the seller under this simplified reference.
Risk Transfer: At named destination
Suitable For: Fully managed delivered sales

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