An Overview of Incoterms® 2020
The Incoterms® are a set of 11 individual rules published by the International Chamber of Commerce (ICC). They define the responsibilities of sellers and buyers for the sale of goods in international and domestic trade transactions.
Each Incoterms rule clarifies three critical aspects of a transaction:
- Tasks – Who is responsible for each step of the logistics process.
- Costs – Who bears the expenses at each stage.
- Risks – When and where the risk of loss or damage transfers from the seller to the buyer.
Understanding Incoterms helps businesses avoid misunderstandings, reduce disputes, and ensure smoother transactions by clearly defining who is responsible for what at every stage.
Incoterms® 2020 – Two Categories
The Incoterms® 2020 rules are grouped into two categories based on the mode of transport:
📦 Any Mode of Transport
7 Rules
Air, Rail, Road, Multimodal, Courier, etc.
🚢 Sea & Inland Waterway
4 Rules
Ocean freight, Coastal shipping, River transport
Category 1: Any Mode of Transport (7 Rules)
| Incoterm | Full Name | Summary |
|---|---|---|
| EXW | Ex Works | Buyer takes all responsibility from seller's premises |
| FCA | Free Carrier | Seller delivers goods to a carrier chosen by buyer |
| CPT | Carriage Paid To | Seller pays for carriage to a named destination |
| CIP | Carriage and Insurance Paid To | Seller pays carriage + insurance to a named destination |
| DAP | Delivered at Place | Seller delivers goods ready for unloading at destination |
| DPU | Delivered at Place Unloaded | Seller delivers and unloads at destination |
| DDP | Delivered Duty Paid | Seller bears all costs including import duties |
Category 2: Sea & Inland Waterway Transport (4 Rules)
| Incoterm | Full Name | Summary |
|---|---|---|
| FAS | Free Alongside Ship | Seller delivers alongside the vessel at named port |
| FOB | Free on Board | Seller delivers goods on board the vessel at named port |
| CFR | Cost and Freight | Seller pays costs and freight to named destination port |
| CIF | Cost, Insurance and Freight | Seller pays costs, freight, and insurance to named destination port |
Quick Reference: Seller vs Buyer Responsibilities
| Incoterm | Seller's Responsibility | Buyer's Responsibility |
|---|---|---|
| EXW | Minimal (make goods available) | All costs and risks from seller's premises |
| FCA | Deliver to carrier nominated by buyer | Main carriage and all risks after delivery |
| CPT | Pay carriage to destination | Risk transfers when goods handed to first carrier |
| CIP | Pay carriage + insurance to destination | Risk transfers when goods handed to first carrier |
| DAP | Deliver ready for unloading at destination | Unloading and import clearance |
| DPU | Deliver and unload at destination | Import clearance and onward costs |
| DDP | All costs including import duties | Unloading only |
| FAS | Deliver alongside vessel at named port | Loading and all costs after |
| FOB | Deliver on board vessel at named port | All costs after loading |
| CFR | Pay costs + freight to destination port | Risk transfers when goods loaded on vessel |
| CIF | Pay costs + freight + insurance to destination | Risk transfers when goods loaded on vessel |
