Terms of Delivery
Incoterms Explainer
A quick reference for the 11 Incoterms® 2020 rules — who (seller or buyer) is responsible for transport, insurance, and risk at each stage.
| Term | Mode | Seller Responsibility | Buyer Responsibility | Risk Transfers At |
|---|---|---|---|---|
EXW Ex Works | Any mode | Makes goods available at their premises only. | Everything — pickup, export clearance, freight, insurance, import. | Seller's premises. |
FCA Free Carrier | Any mode | Delivers goods to a named carrier/place, export cleared. | Main carriage, insurance, import clearance. | When handed to carrier. |
CPT Carriage Paid To | Any mode | Pays freight to named destination, export cleared. | Insurance, import clearance, unloading. | When handed to first carrier. |
CIP Carriage & Insurance Paid To | Any mode | Freight + insurance to named destination. | Import clearance, unloading. | When handed to first carrier. |
DAP Delivered at Place | Any mode | Delivers to named place, ready for unloading. | Import duty/clearance, unloading. | At named destination, before unloading. |
DPU Delivered at Place Unloaded | Any mode | Delivers and unloads at named place. | Import duty/clearance. | After unloading at destination. |
DDP Delivered Duty Paid | Any mode | Everything — freight, insurance, import duty, delivery. | Just receiving the goods. | At buyer's named destination. |
FAS Free Alongside Ship | Sea/Inland waterway | Delivers goods alongside the vessel, export cleared. | Loading, freight, insurance, import. | Alongside the ship at port. |
FOB Free On Board | Sea/Inland waterway | Loads goods on board the vessel, export cleared. | Freight, insurance, import from that point. | Once goods are on board. |
CFR Cost & Freight | Sea/Inland waterway | Pays freight to destination port, loads on board. | Insurance, import clearance. | Once goods are on board (buyer bears risk during transit). |
CIF Cost, Insurance & Freight | Sea/Inland waterway | Freight + insurance to destination port, loads on board. | Import clearance, unloading. | Once goods are on board (buyer bears risk during transit). |
Based on Incoterms® 2020 rules published by the International Chamber of Commerce (ICC). This is a simplified summary for quick reference — always refer to the official ICC Incoterms® 2020 publication and your sales contract for the exact, legally binding terms.
Incoterms 2020 for Export and Import Business
Incoterms define important delivery responsibilities between exporters and importers, including transport, export clearance, import clearance, insurance and the point where risk transfers. Common trade terms include EXW, FCA, FOB, CFR, CIF, CPT, CIP, DAP, DPU and DDP.
How to Choose the Right Incoterm
Choose an Incoterm based on your transport mode, control over freight, insurance requirements, destination, customs responsibilities and commercial agreement. For sea freight, FOB, CFR and CIF are common; for multimodal shipments, FCA, CPT, CIP, DAP and DDP may be more appropriate. Always write the named place or port clearly in the sales contract.