Reference table
All 11 Incoterms 2020 at a glance
| Code | Name | Mode | Buyer Risk | Description |
|---|---|---|---|---|
| EXW | Ex Works | Any | Maximum | Buyer handles everything from the seller's premises. |
| FCA | Free Carrier | Any | High | Seller delivers goods to a named place (carrier or another location). |
| FAS | Free Alongside Ship | Sea | High | Seller delivers goods alongside the vessel at the port of shipment. |
| FOB | Free On Board | Sea | High | Seller delivers goods on board the vessel. Risk transfers at the ship's rail. |
| CFR | Cost and Freight | Sea | Medium | Seller pays freight to the destination port. Risk transfers at origin port. |
| CIF | Cost, Insurance & Freight | Sea | Medium | Like CFR but seller also provides insurance. Most common for ocean freight. |
| CPT | Carriage Paid To | Any | Medium | Seller pays freight to the named destination. Risk transfers at origin. |
| CIP | Carriage & Insurance Paid | Any | Medium | Like CPT but seller also provides insurance to destination. |
| DAP | Delivered At Place | Any | Low | Seller delivers goods to a named place, ready for unloading. |
| DPU | Delivered at Place Unloaded | Any | Low | Seller delivers and unloads goods at the named destination. |
| DDP | Delivered Duty Paid | Any | Minimum | Seller covers everything including import duties and taxes. |
Quick guide
When to use which Incoterm
You are new to importing
Let the seller handle most of the logistics while you learn. You pay duties and handle local delivery.
You want maximum control
You choose the carrier, control transit, and negotiate rates directly. More work, but more control over costs.
You are shipping by ocean
FOB if you have a freight forwarder you trust. CIF if you want the seller to arrange shipping and insurance.
You want door-to-door delivery
The seller handles everything up to your warehouse. DDP means they even pay your import duties.
Common questions
Frequently asked questions
What is an Incoterm?
Incoterms (International Commercial Terms) are standardized rules published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international trade. They determine who pays for freight, insurance, duties, and other costs — and at what point risk transfers from seller to buyer.
FOB vs CIF — which is better?
It depends on your situation. FOB gives you control over shipping — you choose the carrier and negotiate rates, which is better if you ship frequently and have good freight relationships. CIF is simpler — the seller arranges shipping and insurance, which is easier if you are new to importing or ship infrequently. FOB is generally better for experienced importers; CIF is better for beginners.
What changed in Incoterms 2020?
The main change was replacing DAT (Delivered at Terminal) with DPU (Delivered at Place Unloaded), which can now be any place, not just a terminal. FCA was also updated to allow the buyer to instruct the carrier to issue a bill of lading to the seller. CIP now requires a higher level of insurance coverage (Institute Cargo Clauses A) than CIF.
Who chooses the Incoterm?
The Incoterm is negotiated between buyer and seller as part of the purchase agreement. Either party can propose an Incoterm. The chosen Incoterm should be clearly stated in the purchase order, commercial invoice, and contract of sale — for example, 'CIF Vancouver, Incoterms 2020.'
Do Incoterms apply to domestic shipments?
Incoterms are primarily designed for international trade, but some terms (EXW, FCA, CPT, CIP, DAP, DPU, DDP) can be used for domestic transactions. The sea-only terms (FAS, FOB, CFR, CIF) should only be used for ocean and inland waterway transport.
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