Free trade reference

Incoterms® 2020 chart and rule selector

See who pays the freight, who carries the risk, who insures and who clears customs under each of the 11 Incoterms® 2020 rules, in plain English. Not sure which rule fits your shipment? Answer a few questions and get a suggestion with the trade-offs.

Answer a few questions

1. How will the goods travel?
2. Who books and pays the main freight?
3. Will the seller handle export clearance in its own country?
Usually yes: export filings are the exporter’s job.

Suggested rule

FCA · Free Carrier

The seller clears the goods for export and hands them to the carrier the buyer chose. The buyer pays the main freight and takes the risk from that point.

  • The buyer chooses and pays the carrier.
  • The seller clears the goods for export and hands them over at the named place; risk passes there.
  • Works for containers, air, road, rail and parcels.
Risk passes
When the goods are handed to the buyer’s carrier: loaded onto the buyer’s vehicle at the seller’s premises, or ready to unload from the seller’s vehicle at another named place.
Insurance
Not required (either party may insure)
Unloading
Buyer, at its own cost and risk
Write it as
FCA [the place of delivery (the seller’s premises, a terminal or a forwarder’s warehouse)] Incoterms® 2020

Watch out: Name the exact handover point. If the seller needs an on-board bill of lading for a letter of credit, agree that the buyer will instruct its carrier to issue one (an option added in 2020).

Also consider: EXW

A starting point for discussion, not legal advice. The rule only works if your contract names it with a precise place and the edition.

Incoterms® 2020 chart: who does what

Rules are listed from the least to the most seller responsibility within each group. “Seller” is highlighted in blue.

Scroll the table sideways to see every column; the rule stays pinned on the left.

RuleTransportRisk passes to the buyerMain freightInsuranceExport clearanceImport clearance & dutiesUnloading at destination
EXWEx WorksAny modeAt the agreed point at the named place (often the seller’s premises), when the goods are made available to the buyer, not loaded. If no point is agreed, the seller may pick one there.BuyerNot required (either party may insure)BuyerBuyerBuyer, at its own cost and risk
FCAFree CarrierAny modeWhen the goods are handed to the buyer’s carrier: loaded onto the buyer’s vehicle at the seller’s premises, or ready to unload from the seller’s vehicle at another named place.BuyerNot required (either party may insure)SellerBuyerBuyer, at its own cost and risk
CPTCarriage Paid ToAny modeAt origin, when the goods are handed to the first carrier, unless the contract names a later handover point, such as the export port or airport. The seller still pays the freight to the destination.SellerNot required (either party may insure)SellerBuyerBuyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed
CIPCarriage and Insurance Paid ToAny modeAt origin, when the goods are handed to the first carrier, unless the contract names a later handover point, such as the export port or airport.SellerSeller: broad cover under Institute Cargo Clauses (A), for at least 110% of the contract price, in the contract currencySellerBuyerBuyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed
DAPDelivered at PlaceAny modeAt the named destination, on the arriving truck or other vehicle, ready to unload.SellerNot required (either party may insure)SellerBuyerBuyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed
DPUDelivered at Place UnloadedAny modeAt the named destination, once the goods are unloaded.SellerNot required (either party may insure)SellerBuyerSeller, at its own cost and risk; risk passes only once the goods are unloaded
DDPDelivered Duty PaidAny modeAt the named destination, on the arriving vehicle, cleared for import and ready to unload.SellerNot required (either party may insure)SellerSellerBuyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed
FASFree Alongside ShipSea / inland waterwayAt the port of shipment, when the goods are placed alongside the buyer’s vessel (for example on the quay).BuyerNot required (either party may insure)SellerBuyerBuyer, at its own cost and risk
FOBFree on BoardSea / inland waterwayAt the port of shipment, once the goods are on board the buyer’s vessel.BuyerNot required (either party may insure)SellerBuyerBuyer, at its own cost and risk
CFRCost and FreightSea / inland waterwayAt the port of shipment, once the goods are on board, even though the seller pays freight to the destination port.SellerNot required (either party may insure)SellerBuyerBuyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed
CIFCost, Insurance and FreightSea / inland waterwayAt the port of shipment, once the goods are on board.SellerSeller: minimum cover under Institute Cargo Clauses (C), for at least 110% of the contract price, in the contract currencySellerBuyerBuyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed

The 11 rules in plain English

EXW · Ex Works

Any mode · named place: the seller’s premises or another place of collection

The seller packs, marks and checks the goods, makes them available for collection at the named place and, if asked, supplies information for export formalities at the buyer’s cost. The buyer handles and pays for the rest: loading, export and import clearance, freight and insurance.

Risk passes
At the agreed point at the named place (often the seller’s premises), when the goods are made available to the buyer, not loaded. If no point is agreed, the seller may pick one there.
Loading
Buyer loads; the seller has no duty to. If the seller loads anyway, the risk during loading generally stays with the buyer, which FCA avoids.
Unloading
Buyer, at its own cost and risk.
Good for
Domestic-style pickups, or a buyer with its own agent in the seller’s country.
Watch out
The buyer often cannot legally file the seller’s export paperwork, and the seller usually ends up loading anyway. FCA at the seller’s premises is usually the better choice.

FCA · Free Carrier

Any mode · named place: the place of delivery (the seller’s premises, a terminal or a forwarder’s warehouse)

The seller clears the goods for export and hands them to the carrier the buyer chose. The buyer pays the main freight and takes the risk from that point.

Risk passes
When the goods are handed to the buyer’s carrier: loaded onto the buyer’s vehicle at the seller’s premises, or ready to unload from the seller’s vehicle at another named place.
Loading
Seller loads when delivery is at its own premises; otherwise the buyer’s carrier unloads the seller’s truck.
Unloading
Buyer, at its own cost and risk.
Good for
Containers, air freight, parcels and most buyer-arranged shipments. It is the most flexible “buyer arranges freight” rule.
Watch out
Name the exact handover point. If the seller needs an on-board bill of lading for a letter of credit, agree that the buyer will instruct its carrier to issue one (an option added in 2020).

CPT · Carriage Paid To

Any mode · named place: the destination the seller pays carriage to

The seller books and pays the freight to the named destination, but the buyer carries the risk of loss or damage from the moment the goods are handed over to the carrier.

Risk passes
At origin, when the goods are handed to the first carrier, unless the contract names a later handover point, such as the export port or airport. The seller still pays the freight to the destination.
Loading
Seller.
Unloading
Buyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed.
Good for
Sellers who can get good freight rates and buyers who are happy to insure the transit themselves.
Watch out
Risk and cost split at different places. Name the destination after the rule and also agree in the contract where the goods are handed over, because risk passes there. The buyer should insure the transit, because the seller does not have to.

CIP · Carriage and Insurance Paid To

Any mode · named place: the destination the seller pays carriage and insurance to

Like CPT, but the seller must also buy cargo insurance for the buyer’s benefit. Under the 2020 rules the default cover is broad, all-risks-style cover (Institute Cargo Clauses (A)).

Risk passes
At origin, when the goods are handed to the first carrier, unless the contract names a later handover point, such as the export port or airport.
Loading
Seller.
Unloading
Buyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed.
Good for
Manufactured goods sent by container, air or road where the buyer wants the seller to arrange insured door-to-port or door-to-door freight.
Watch out
The seller pays for higher insurance cover than under CIF. The parties can agree a lower level, but must say so in the contract. As with CPT, agree where the goods are handed over as well as the destination.

DAP · Delivered at Place

Any mode · named place: the destination address or place

The seller gets the goods to the buyer’s door (or another named place) at its own risk. The buyer unloads and handles import clearance, duties and taxes.

Risk passes
At the named destination, on the arriving truck or other vehicle, ready to unload.
Loading
Seller.
Unloading
Buyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed.
Good for
Door delivery where the buyer, as importer of record, clears customs and pays the duties.
Watch out
If the goods are held at customs because the buyer has not cleared them, extra storage and delay costs fall on the buyer. If the seller’s freight price includes unloading, tell the buyer so it is not paid for twice.

DPU · Delivered at Place Unloaded

Any mode · named place: the destination place where the seller unloads

Like DAP, except the seller must also unload the goods at the destination. It replaced DAT (Delivered at Terminal) in 2020 and can be any place, not only a terminal.

Risk passes
At the named destination, once the goods are unloaded.
Loading
Seller.
Unloading
Seller, at its own cost and risk; risk passes only once the goods are unloaded.
Good for
Deliveries to a terminal, warehouse or job site where the seller’s carrier will unload.
Watch out
The seller must be sure it can actually unload at that place (equipment, permission, dock access).

DDP · Delivered Duty Paid

Any mode · named place: the destination address or place

The seller takes on the most: freight, risk to the destination, and import clearance with duties and import taxes paid.

Risk passes
At the named destination, on the arriving vehicle, cleared for import and ready to unload.
Loading
Seller.
Unloading
Buyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed.
Good for
Sellers that are set up to act as importer of record in the buyer’s country, or consumer-style shipments where the buyer expects no charges on delivery.
Watch out
The seller may be unable to register as an importer or reclaim import VAT/GST in the buyer’s country. Duties and tariffs that change after you quote are the seller’s cost.

FAS · Free Alongside Ship

Sea / inland waterway · named place: the port of shipment

The seller clears the goods for export and delivers them next to the ship the buyer chartered or booked. The buyer loads and pays the sea freight.

Risk passes
At the port of shipment, when the goods are placed alongside the buyer’s vessel (for example on the quay).
Loading
Buyer (onto the vessel).
Unloading
Buyer, at its own cost and risk.
Good for
Bulk and break-bulk cargo such as grain, logs or heavy machinery loaded directly onto a ship.
Watch out
Not suitable for containers, which are handed over at a terminal before the ship arrives. Use FCA instead.

FOB · Free on Board

Sea / inland waterway · named place: the port of shipment

The seller clears the goods for export and loads them onto the ship the buyer arranged. The buyer pays the ocean freight and takes the risk from that point.

Risk passes
At the port of shipment, once the goods are on board the buyer’s vessel.
Loading
Seller (onto the vessel).
Unloading
Buyer, at its own cost and risk.
Good for
Bulk and non-containerized sea cargo loaded straight onto the vessel.
Watch out
Very often used for containers, where FCA fits better: the seller loses control of a container at the terminal days before it is “on board”, yet still carries the risk until then.

CFR · Cost and Freight

Sea / inland waterway · named place: the port of destination

The seller books and pays the sea freight to the destination port; the buyer bears the risk once the goods are loaded at the port of shipment.

Risk passes
At the port of shipment, once the goods are on board, even though the seller pays freight to the destination port.
Loading
Seller (onto the vessel).
Unloading
Buyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed.
Good for
Bulk sea cargo where the seller can get the freight and the buyer insures the voyage.
Watch out
For containers, CPT is the matching any-mode rule. The buyer should insure the voyage.

CIF · Cost, Insurance and Freight

Sea / inland waterway · named place: the port of destination

Like CFR, but the seller also buys cargo insurance for the voyage. The default minimum is limited, named-perils cover (Institute Cargo Clauses (C)).

Risk passes
At the port of shipment, once the goods are on board.
Loading
Seller (onto the vessel).
Unloading
Buyer’s responsibility and risk. If the seller’s carriage contract includes unloading charges, the seller pays them and cannot recharge them unless agreed.
Good for
Bulk commodity sales by sea, especially with letters of credit.
Watch out
The minimum cover is narrow; agree broader cover if you need it. For containers, use CIP.

Incoterms® rules and US customs value

The rule you choose changes what the price includes, but not how customs values the goods. The United States assesses duty on the transaction value, which excludes the international freight and insurance (19 U.S.C. 1401a), so those costs are taken out of a CIF price before duty is calculated. Many other countries, including the EU, value imports including freight and insurance to the border. Estimate both with the landed cost calculator.

How to choose an Incoterms® rule

  1. Decide who controls the freight

    The party that books the main carriage usually gets better rates and visibility. Buyer-arranged freight points to FCA (or FOB for bulk); seller-arranged freight points to a C or D rule.

  2. Decide where risk should pass

    C rules move the risk to the buyer at origin (at the handover to the carrier, or on board for CFR and CIF) although the seller pays the freight, so agree that handover point as well as the destination. D rules keep the risk with the seller until the destination.

  3. Agree who handles customs

    Export clearance is normally the seller’s job and import clearance the buyer’s. Only choose DDP if the seller can import into the buyer’s country.

  4. Name a precise place and the edition

    Write the rule, an exact place and “Incoterms® 2020” in the quote, contract and commercial invoice.

Key terms in the Incoterms® rules

Named place
The exact location written after the rule, such as a warehouse address or port. It fixes where delivery or carriage ends.
Delivery
Under the Incoterms® rules, the point where the seller has done its job and the risk passes to the buyer; not necessarily where the goods arrive.
Main carriage
The principal international leg, such as the ocean or air freight.
Export clearance
Export filings, licences and checks in the seller’s country (in the US, usually an EEI filed in AES when required).
Importer of record
The party responsible for clearing goods through customs and paying duties in the destination country.
Institute Cargo Clauses
Standard marine cargo insurance terms: (A) is broad cover, (C) covers a limited list of major perils.

Incoterms® rules FAQ

What are the Incoterms® rules?
The Incoterms® rules are three-letter trade terms published by the International Chamber of Commerce. Written into a sales contract, international or domestic, a rule says where the seller delivers the goods, when the risk of loss passes to the buyer, and which party pays for freight, insurance and customs clearance.
How many Incoterms® rules are there?
Incoterms® 2020 has 11 rules. Seven work for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU and DDP) and four are only for sea and inland waterway transport (FAS, FOB, CFR and CIF).
What is the difference between FOB and FCA?
Under FOB the seller carries the risk until the goods are on board the ship, which suits bulk cargo loaded straight onto a vessel. Under FCA the risk passes when the goods are handed to the buyer’s carrier, such as at a container terminal or the seller’s dock, so FCA is the better fit for containers, air and road freight.
What is the difference between DAP and DDP?
Both deliver to the buyer’s destination at the seller’s risk. Under DAP the buyer clears customs and pays import duties and taxes; under DDP the seller does. DDP only works if the seller can act as the importer in the buyer’s country.
Do the Incoterms® rules say who owns the goods or when to pay?
No. The Incoterms® rules cover delivery, risk, costs and clearance. Ownership (title), payment terms, price and what happens if a party breaches the contract must be set out separately in the sales contract.
Is “FOB shipping point” an Incoterms® rule?
No. “FOB shipping point” and “FOB destination” are US domestic shipping terms that come from the Uniform Commercial Code and accounting practice. The Incoterms® FOB rule is different: the seller delivers the goods on board a vessel at a named port of shipment, so it is only for sea and inland waterway transport. The Incoterms® rules can be written into domestic contracts too, so say which FOB you mean in the contract.
How do I write an Incoterms® rule on an invoice?
Give the rule, a precise named place and the edition, for example “FCA 500 Industrial Way, Dayton, Ohio, USA Incoterms® 2020” or “CIF Port of Rotterdam Incoterms® 2020”. A vague place, such as a country, leaves the delivery point open to argument.

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Summaries are ShipWave’s own plain-language explanations of the Incoterms® 2020 rules, checked against the ICC’s published Incoterms® 2020 materials (the overview, the rules’ introduction and explanatory notes, and ICC Academy guidance) and the US International Trade Administration’s guide on October 7, 2026. They are not the official rules text, which is published by the ICC. Read the full rules, and get advice for significant contracts.

Incoterms® is a registered trademark of the International Chamber of Commerce. ShipWave is not affiliated with, approved by or sponsored by the ICC. Sources: ICC Incoterms® 2020; trade.gov, Know Your Incoterms.