Incoterms® 2020 Explorer
Eleven three-letter rules decide who books freight, who pays for insurance and customs, and the exact moment risk passes from seller to buyer. Click any rule to see it in plain English.
S = Seller pays/arranges · B = Buyer pays/arranges. Insurance “S” means the seller has a contractual obligation to insure (CIF, CIP). A simplified view — the official rules contain more detail.
Which Incoterm should I use?
Answer four questions for a sensible starting point to discuss with your supplier.
The two families of rules
Any mode of transport (7): EXW, FCA, CPT, CIP, DAP, DPU and DDP. Use these for containers, air, road, rail and multimodal moves. Sea and inland waterway only (4): FAS, FOB, CFR and CIF — designed for goods loaded directly onto a vessel, such as bulk commodities.
Five rules that cause the most disputes
- FOB for containers. Containers are handed over at a terminal days before loading, yet FOB moves risk only when goods are on board. FCA closes that gap.
- EXW for exports. The buyer becomes responsible for export clearance in a country where they may have no legal presence.
- CIF/CFR risk. The seller pays freight, but risk passes at the origin port — buyers often assume otherwise.
- DDP for foreign sellers. The seller must act as importer and pay destination VAT, which is often impractical.
- A vague named place. “FCA China” is not enough; name the exact address, terminal or port.
Write the rule, a precise named place and the edition, e.g. “FCA Ningbo CFS, No. 88 Example Road, Incoterms® 2020”.
Frequently asked questions
Do Incoterms decide when ownership transfers?
No. Incoterms® rules cover delivery, risk, costs and customs duties. Transfer of title and payment are governed by your sales contract and applicable law.
What changed in Incoterms® 2020?
DAT became DPU, CIP now requires a higher (all-risks) level of insurance, FCA allows an on-board bill of lading if agreed, and parties may use their own transport under FCA, DAP, DPU and DDP.
Can I still use Incoterms 2010?
Yes, if the contract clearly says so — older editions remain usable by agreement. But most traders now specify the 2020 edition.
Incoterms® and the Incoterms® logo are registered trademarks of the International Chamber of Commerce (ICC). This explorer is an independent educational summary and is not endorsed by ICC. For the authoritative text, consult the official ICC publication at iccwbo.org.