Incoterms are standardized trade terms published by the International Chamber of Commerce that define who is responsible for shipping, insurance, customs, and risk in an international sale. The 2020 edition has 11 rules and is the current version.

What is the difference between risk transfer and cost transfer?

Risk transfer is the point where loss or damage becomes the buyer's problem; cost transfer is who pays for each leg of carriage. In CIF, for example, risk passes when goods are loaded but the seller still pays freight to the destination port.

Which Incoterms work for any transport mode?

Seven rules — EXW, FCA, CPT, CIP, DAP, DPU, and DDP — work for any mode including air, road, rail, and multimodal. The other four — FAS, FOB, CFR, and CIF — are for sea and inland waterway transport only.

Which term puts the most responsibility on the seller?

DDP (Delivered Duty Paid) places maximum obligation on the seller, who handles everything including import customs and duty at the destination. EXW (Ex Works) is the opposite, with the buyer responsible from the seller's premises onward.

Why did FOB get misused for containers?

FOB, CFR, and CIF were written for goods passed over a ship's rail and are meant for bulk cargo. For containers handed to a carrier at a terminal, the ICC recommends FCA, CPT, or CIP, because risk should pass at the terminal, not at the ship.

Incoterms 2020 Reference

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Incoterms 2020 are the 11 standard trade terms that define who does what in an international sale — who arranges carriage, who insures, who clears customs, and crucially where risk passes from seller to buyer. This tool shows the full profile of each rule.

How it works

Each Incoterm sets a single named place and a point along the journey where risk transfers, plus who bears each cost:

EXW — buyer collects from the seller’s premises; seller does the least.
FCA / FAS / FOB — seller delivers to a carrier, ship’s side, or on board.
CFR / CIF / CPT / CIP — seller pays carriage (and, for CIF/CIP, insurance) to the destination, but risk still passes earlier at shipment.
DAP / DPU / DDP — seller delivers at the destination; DDP also pays import duty.

Note the split in the C-terms: the seller pays freight to the destination but risk transfers at the origin when goods are handed over — a common source of disputes.

Tips and examples

Use the multimodal group (FCA, CPT, CIP, DAP, DPU, DDP) for containerised or air freight; reserve FAS, FOB, CFR, CIF for bulk sea cargo.
2020 raised the required insurance cover under CIP to Institute Cargo Clauses (A), while CIF stayed at the minimum (C).
Always name the precise place after the term, e.g. FCA Shanghai Port or DDP 10 High St, London — the term alone is incomplete.