Incoterms 2020: the 11 rules in one table
From EXW to DDP: where the risk passes, who pays freight and insurance, and who handles customs under each of the 11 rules, in one table; plus four steps to choose the right rule.
Alper AzakoğluForeign trade consultant
4 min read
Updated:
What are Incoterms?
Incoterms (International Commercial Terms) are delivery rules published by the International Chamber of Commerce (ICC). They answer three questions between seller and buyer: where are the goods delivered, when does the risk pass to the buyer, and who pays which costs. The current version is Incoterms® 2020, in force since 1 January 2020.
Each rule is written as a three-letter code and always with a place: “FCA Kayseri, factory” or “CIF Port of Hamburg”. Without a place, the rule is unclear.
The 11 rules in one table
The first seven rules can be used for any mode of transport (road, air, sea or multimodal). The last four are only for sea and inland waterway transport.
| Rule | Name | Risk passes | Main carriage paid by | Insurance | Export clearance | Import clearance |
|---|---|---|---|---|---|---|
| EXW | Ex Works | At the seller’s premises, when the goods are placed at the buyer’s disposal | Buyer | Buyer (not required) | Buyer | Buyer |
| FCA | Free Carrier | When the goods are handed to the carrier named by the buyer | Buyer | Buyer (not required) | Seller | Buyer |
| CPT | Carriage Paid To | When the goods are handed to the first carrier | Seller | Buyer (not required) | Seller | Buyer |
| CIP | Carriage and Insurance Paid To | When the goods are handed to the first carrier | Seller | Seller, broad cover (ICC A) | Seller | Buyer |
| DAP | Delivered at Place | At destination, on the arriving vehicle, ready for unloading | Seller | Seller (not required) | Seller | Buyer |
| DPU | Delivered at Place Unloaded | At destination, once unloaded from the vehicle | Seller | Seller (not required) | Seller | Buyer |
| DDP | Delivered Duty Paid | At destination, cleared for import, on the arriving vehicle | Seller | Seller (not required) | Seller | Seller |
| FAS | Free Alongside Ship | At the port of shipment, alongside the ship | Buyer | Buyer (not required) | Seller | Buyer |
| FOB | Free on Board | At the port of shipment, when the goods are on board | Buyer | Buyer (not required) | Seller | Buyer |
| CFR | Cost and Freight | At the port of shipment, when the goods are on board | Seller | Buyer (not required) | Seller | Buyer |
| CIF | Cost, Insurance and Freight | At the port of shipment, when the goods are on board | Seller | Seller, minimum cover (ICC C) | Seller | Buyer |
Watch out
“Insurance: not required” does not mean insurance is unnecessary. Only CIF and CIP oblige the seller to insure; under the other rules, the party carrying the risk should consider insuring its goods.
Four groups, one logic
- E group (EXW): The lightest load for the seller; the goods are made available at its premises. Even loading is the buyer’s job.
- F group (FCA, FAS, FOB): The buyer pays the main carriage. The seller clears the goods for export and hands them to the buyer’s carrier.
- C group (CPT, CIP, CFR, CIF): The seller pays the main carriage, but risk passes to the buyer in the country of shipment. The place where costs pass and the place where risk passes are different.
- D group (DAP, DPU, DDP): The seller takes the goods to the destination and carries the risk until then. Under DDP, the seller also pays import duties.
How to choose the right rule
- Decide the mode of transport. For containers, road or air: FCA, CPT, CIP, DAP, DPU or DDP. For bulk and conventional sea cargo: FAS, FOB, CFR or CIF.
- See who can get the better freight rate. If you work with a forwarder regularly, the C or D group may give you a price advantage; if the buyer has a strong logistics contract, the F group fits.
- Ask whether you can handle import formalities at destination. Under DDP the import declaration and duties are yours; without a representative in that country, DAP is safer.
- Check it against the payment method. With a letter of credit, the required documents (bill of lading, insurance policy) must match the rule you chose.
Common mistakes
- Using FOB for containers: After you deliver the container to the terminal, the risk stays with you until it is loaded. For these shipments FCA fits better than FOB.
- Assuming CIF insurance covers everything: The insurance the seller must buy under CIF is minimum cover (Institute Cargo Clauses C). If broader cover is needed, write it into the contract.
- Leaving the place vague: “FOB Türkiye” is not enough; name the port or delivery point.
- Forgetting export formalities under EXW: Under EXW, export clearance is the buyer’s job, but the seller often still needs proof of export for its own tax records. Many exporters prefer FCA.
We stand beside you on quotes and contracts
We agree the delivery term, payment method and contract wording with the buyer, and coordinate the shipment with your forwarder and customs broker.
Frequently asked questions
Are Incoterms mandatory?
No. Incoterms are rules published by the International Chamber of Commerce (ICC) that apply when the parties write them into their contract. They become binding when the contract states them clearly, for example “FOB Port of Izmir, Incoterms® 2020”.
Can we still use Incoterms 2010?
Yes; the version written in the contract applies. But Incoterms 2010 had DAT instead of DPU, and a different insurance level for CIP. Writing “Incoterms® 2020” in new contracts avoids confusion.
Do Incoterms cover ownership or payment?
No. Incoterms cover delivery, transfer of risk, the split of costs and who handles customs formalities. Transfer of title, payment and dispute terms must be written separately in the sales contract.
FOB or FCA for container shipments?
The ICC recommends FCA for containerised goods delivered at a terminal. Under FOB, risk passes only when the goods are on board, but after you hand the container to the terminal you no longer control it until loading.
Sources
- International Chamber of Commerce (ICC), Incoterms® 2020: iccwbo.org
Author
Alper Azakoğlu
For 30 years he has worked as foreign trade consultant and foreign trade manager for manufacturers in industrial zones across Türkiye. He writes these guides from his own work in the field.