Incoterms 2020 Explained: All 11 Rules With Examples
Incoterms 2020 divide delivery costs, risk and customs duties between seller and buyer. They do not set payment terms, ownership or product quality. Always write the rule, named port or place and edition into the contract; paying the freight does not always mean carrying the transit risk.
EXW to FOB to CIF to DDP Price Converter →
Any mode: EXW, FCA, CPT, CIP, DAP, DPU and DDP
| Rule | Main carriage: arranges and pays | Risk transfer | Export clearance | Import clearance | Transport modes |
|---|---|---|---|---|---|
| EXW Ex Works | Buyer | When the goods are made available at the seller's premises, not yet loaded. | Buyer | Buyer | Any mode |
| FCA Free Carrier | Buyer | When the seller hands the goods to your carrier at the agreed place. | Seller | Buyer | Any mode |
| CPT Carriage Paid To | Seller | When the goods are handed to the first carrier — in China, not at the destination. | Seller | Buyer | Any mode |
| CIP Carriage and Insurance Paid To | Seller | When the goods are handed to the first carrier, as under CPT. | Seller | Buyer | Any mode |
| DAP Delivered at Place | Seller | When the goods arrive at the named destination, ready for unloading. | Seller | Buyer | Any mode |
| DPU Delivered at Place Unloaded | Seller | When the goods have been unloaded at the named destination. | Seller | Buyer | Any mode |
| DDP Delivered Duty Paid | Seller | When the goods arrive at the named destination, cleared for import and ready for unloading. | Seller | Seller | Any mode |
Sea and inland waterway only: FAS, FOB, CFR and CIF
| Rule | Main carriage: arranges and pays | Risk transfer | Export clearance | Import clearance | Transport modes |
|---|---|---|---|---|---|
| FAS Free Alongside Ship | Buyer | When the goods are placed alongside the vessel at the port of shipment. | Seller | Buyer | Sea / inland waterway |
| FOB Free on Board | Buyer | When the goods are loaded on board the vessel at the port of shipment. | Seller | Buyer | Sea / inland waterway |
| CFR Cost and Freight | Seller | When the goods are loaded on board at the port of shipment in China — even though the seller is paying the freight. | Seller | Buyer | Sea / inland waterway |
| CIF Cost, Insurance and Freight | Seller | When the goods are loaded on board at the port of shipment, as under CFR. | Seller | Buyer | Sea / inland waterway |
Examples: choose the place, then the rule
EXW at the factory: the buyer arranges collection and export clearance. FCA at the seller’s premises instead puts loading and export clearance with the seller. Name the actual handover location.
FOB at the Chinese loading port: the seller puts the goods on board the buyer’s nominated vessel. Under CIF to a named UK port the seller pays freight and agreed insurance, but risk still transfers on board at origin.
CPT or CIP to a named destination: the seller buys carriage, yet risk transfers when goods are handed to the carrier, not on arrival. CIP adds the seller’s insurance obligation.
DAP at your UK warehouse leaves import clearance and taxes to the buyer. DDP puts those obligations on the seller; confirm who can legally import and whose name appears on the VAT documents. DPU includes unloading at the named destination.
Incoterms 2010 vs 2020: what changed?
- DAT became DPU: delivery includes unloading, and the named place need not be a terminal.
- CIP normally requires Institute Cargo Clauses (A) cover or equivalent; CIF retains the narrower Clauses (C) baseline. Parties can agree different cover.
- FCA allows an agreed arrangement for the buyer to instruct its carrier to issue an on-board bill of lading to the seller, useful where a documentary credit requires it. This does not move the FCA risk-transfer point.
There is no Incoterms 2023
A document dated 2023 does not create an Incoterms 2023 edition. The ICC rule set explained here is Incoterms 2020. State the edition explicitly; do not silently substitute a new edition for an older contract.
Guides and tools for your quote
- Interactive Incoterms responsibilities chart →
- EXW to FOB to CIF to DDP Price Converter →
- Incoterms explained: EXW, FOB, CIF and DDP →
- EXW Meaning: Ex Works Explained (With Examples) →
- FOB Meaning: Free On Board Explained (With Examples) →
- CIF Meaning: Cost, Insurance and Freight Explained →
- DDP Meaning: Delivered Duty Paid Explained →
- CPT or CIP for air freight from China? →
- FCA or FOB for a China container order? →
- Can you reclaim VAT on DDP shipments from China? →
- FOB, CIF or DAP for China goods to my country? →