Incoterms 2020: The Complete Guide for Importers and Exporters

If you're importing or exporting goods, Incoterms define who's responsible for what at each stage of delivery. Here's your complete guide to Incoterms 2020.

What Are Incoterms?

Incoterms (International Commercial Terms) are a set of rules published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers in international transactions.

The Incoterms 2020 Rules

Rules for Any Mode (E, F, C, D)

E Terms - Departure

EXW - Ex Works

• Seller: Makes goods available at their premises
• Buyer: All responsibility and cost from the seller's location

Best for: Established importers with strong logistics

F Terms - Main Carriage Unpaid

FCA - Free Carrier

• Seller: Delivers goods to carrier
• Buyer: Main carriage paid

FAS - Free Alongside Ship

• Seller: Delivers alongside the vessel
• Buyer: Loading onto vessel

FOB - Free On Board

• Seller: Loads goods onto the vessel
• Buyer: Main carriage, insurance

Best for: Traditional shipping arrangements

C Terms - Main Carriage Paid

CFR - Cost and Freight

• Seller: Main carriage paid
• Buyer: Insurance, risk transfers at loading

CIF - Cost, Insurance, Freight

• Seller: Main carriage, insurance paid
• Buyer: Risk transfers at loading

CPT - Carriage Paid To

• Seller: Main carriage paid to destination
• Buyer: Risk transfers at origin

CIP - Carriage, Insurance Paid

• Seller: Main carriage, insurance paid
• Buyer: Risk transfers at origin

Best for: Sellers wanting to offer competitive terms

D Terms - Arrival

DAP - Delivered at Place

• Seller: Delivers to destination
• Buyer: Unloading, import

DPU - Delivered at Place Unloaded

• Seller: Delivers, unloads at destination
• Buyer: Import, duties

DDP - Delivered Duty Paid

• Seller: Delivers with duties paid
• Buyer: Only Unloading

Best for: Premium service, established markets

Rules for Sea/Inland Waterway Only

FAS, FOB, CFR, CIF - specifically for sea transport

Risk and Responsibility Transfers

Visual Summary

Buyer's Risk →
          EXW→FCA→FAS→FOB→CFR→CIF→CPT→CIP→DAP→DPU→DDP ← Seller's Risk
          ↓    ↓   ↓   ↓   ↓   ↓  ↓   ↓   ↓   ↓   ↓   ↓
Seller's Responsibility →

Choosing the Right Incoterm

Consider Your Customer

• What are they comfortable with?
• What's their logistics capability?
• What's standard in their industry?

Consider Your Business

• What's your export experience?
• Can you handle logistics?
• What's your risk tolerance?

Consider Costs

• More seller responsibility = higher price
• Less seller responsibility = lower price

Incoterms Mistakes to Avoid

Misunderstanding Risk Transfer

Remember: Risk and responsibility are separate. Just because you deliver doesn't mean risk transfers.

Using Obsolete Terms

❌ DAF (replaced by DPU) ❌ DES (replaced by CIF/CFR) ✅ Use Incoterms 2020 only

Not Specifying Place

❌ "FOB" ✅ "FOB Shanghai, China"

Wrong Mode

❌ Using FOB for air freight ✅ Use FCA for air/sea

Using the Incoterms Visualizer

Our Incoterms Visualizer helps you:

1. Compare all Incoterms side by side
2. See risk and cost breakdowns
3. Understand responsibility splits
4. Choose the right term for your situation

It's an essential tool for anyone in international trade.

Quick Reference

| Term | Risk Transfer | Best For | |------|------------|----------| | EXW | Seller's door | Expert importers | | FOB | On vessel | Traditional shipping | | CIF | Loading port | Seller arranges insurance | | DDP | Buyer's door | Premium service |

Key Takeaways

• Know what each term means
• Choose appropriate to your relationship
• Always specify the place
• Use Incoterms 2020

With the right Incoterm, you can structure fair deals and avoid costly misunderstandings in international trade.