Incoterms 2020 explainedIncoterms 2020, in one chart.
Incoterms 2020 are the eleven trade terms published by the International Chamber of Commerce (ICC) that say who pays for freight, insurance and customs, and where risk passes from seller to buyer. Airlift Logistics, a Dubai freight forwarder, explains each rule from EXW to DDP in plain English, with a chart of who pays at every stage and tips for shipments to and from the UAE.
Who pays for each stage
Seller cells are blue, buyer cells are sand. Under the C rules, risk passes at origin even though the seller pays the main freight.
| Rule | Mode | Loading at origin | Export clearance | Origin port or terminal | Main freight | Insurance | Unloading at destination | Import clearance and duty |
|---|---|---|---|---|---|---|---|---|
| EXWEx Works | Any | Buyer | Buyer | Buyer | Buyer | Optional | Buyer | Buyer |
| FCAFree Carrier | Any | Seller | Seller | Seller | Buyer | Optional | Buyer | Buyer |
| CPTCarriage Paid To | Any | Seller | Seller | Seller | Seller | Optional | Buyer | Buyer |
| CIPCarriage and Insurance Paid To | Any | Seller | Seller | Seller | Seller | Seller | Buyer | Buyer |
| DAPDelivered at Place | Any | Seller | Seller | Seller | Seller | Optional | Buyer | Buyer |
| DPUDelivered at Place Unloaded | Any | Seller | Seller | Seller | Seller | Optional | Seller | Buyer |
| DDPDelivered Duty Paid | Any | Seller | Seller | Seller | Seller | Optional | Buyer | Seller |
| FASFree Alongside Ship | Sea | Seller | Seller | Seller | Buyer | Optional | Buyer | Buyer |
| FOBFree On Board | Sea | Seller | Seller | Seller | Buyer | Optional | Buyer | Buyer |
| CFRCost and Freight | Sea | Seller | Seller | Seller | Seller | Optional | Buyer | Buyer |
| CIFCost, Insurance and Freight | Sea | Seller | Seller | Seller | Seller | Seller | Buyer | Buyer |
A simplified guide. The exact split depends on the named place and your contract; check the ICC text for details.
Where risk passes under each rule
The point where risk passes matters most if goods are lost or damaged on the way.
| Rule | Risk passes to the buyer | Main freight paid by |
|---|---|---|
| EXW Ex Works | When goods are made available at the seller's premises | Buyer |
| FCA Free Carrier | When goods are handed to the buyer's carrier | Buyer |
| CPT Carriage Paid To | When goods are handed to the first carrier | Seller |
| CIP Carriage and Insurance Paid To | When goods are handed to the first carrier | Seller |
| DAP Delivered at Place | At the named destination, ready for unloading | Seller |
| DPU Delivered at Place Unloaded | At the named destination, once unloaded | Seller |
| DDP Delivered Duty Paid | At the destination, cleared for import | Seller |
| FAS Free Alongside Ship | When goods are alongside the ship at the loading port | Buyer |
| FOB Free On Board | When goods are on board at the loading port | Buyer |
| CFR Cost and Freight | When goods are on board at the loading port | Seller |
| CIF Cost, Insurance and Freight | When goods are on board at the loading port | Seller |
What changed from 2010
The 2020 edition took effect on 1 January 2020 and is still the current version.
- 01
Delivered at Terminal was renamed Delivered at Place Unloaded, so the place can be anywhere.
- 02
Higher cover under CIP
CIP now needs insurance at the level of Institute Cargo Clauses (A). CIF keeps Clauses (C).
- 03
On-board B/L under FCA
Parties can agree that the buyer's carrier issues an on-board bill of lading to the seller.
- 04
Own transport allowed
Sellers or buyers may use their own vehicles under FCA, DAP, DPU and DDP.
- 05
Costs listed in one place
Each rule now lists all costs together, making the split easier to check.
- 06
Security duties clearer
Who handles transport security requirements is stated for each rule.
Choosing a rule for Dubai shipments
Practical tips from shipments through Jebel Ali and Dubai airports.
- 01
Containers: FCA over FOB
Containers are handed over at a terminal before loading, so FCA fits better than FOB.
- 02
Name the place exactly
Write the full place, for example FCA Jebel Ali or DAP Riyadh warehouse.
- 03
DDP needs a local importer
The seller must be able to clear and pay duty in the buyer's country.
Incoterms 2020 questions, answered
Last updated ·
See all shipping questionsAsk a freight questionIncoterms 2020 has eleven rules. Seven can be used for any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU and DDP. Four are for sea and inland waterway only: FAS, FOB, CFR and CIF. Each rule sets who pays for transport, insurance and customs, and where risk passes.
- The ICC publishes the rules.
- Always add a named place.
Several rules were updated from the 2010 edition. DAT became DPU, Delivered at Place Unloaded. CIP now needs a higher level of insurance, Institute Cargo Clauses (A). FCA allows an on-board bill of lading, and parties can use their own transport under some rules. Costs are now listed together in each rule.
- CIF still needs only Clauses (C).
- In force since 1 January 2020.
Incoterms 2020 is still the current edition. The ICC usually revises the rules about every ten years, and work on a future edition has been reported, but no new text has been published. Contracts should state "Incoterms 2020" so both sides know which version applies.
- Older editions can still be chosen by agreement.
- Check the ICC website for news.
FCA usually suits containers better than FOB. Containers are handed to the carrier at a terminal, often days before loading, so the seller should not keep the risk until the box is on board. For sellers who pay freight, CPT or CIP fit containers better than CFR or CIF.
- Name the place, such as FCA Jebel Ali.
- FOB still suits bulk cargo.