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Incoterms 2020: who pays what

The Incoterms® 2020 rules are the International Chamber of Commerce’s eleven three-letter trade terms. Each one sets where the seller delivers, when risk passes to the buyer, and who pays for main carriage, export and import clearance and insurance. Pick a rule to follow it along a shipment.

Any mode of transport

Sea and inland waterway

  1. Seller’s premises Seller pays Risk passes to the buyer
  2. Export clearance Seller pays Risk passes to the buyer
  3. Origin port or terminal Seller pays Risk passes to the buyer
  4. Main carriage Buyer pays Risk passes to the buyer
  5. Destination port or terminal Buyer pays Risk passes to the buyer
  6. Import clearance Buyer pays Risk passes to the buyer
  7. Buyer’s premises Buyer pays Risk passes to the buyer
Seller pays Buyer pays Where risk passes A typical shipment. The named place in your contract sets the exact point.

FOB

Free on Board

Sea and inland waterway

The seller delivers when the goods are loaded on board the buyer’s vessel at the port of shipment.

Risk passes
On board the vessel
Main carriage paid by
Buyer
Export clearance
Seller
Import clearance
Buyer
Insurance
Neither side has to insure

All 11 rules side by side

The seller clears export under every rule except EXW, and the buyer clears import under every rule except DDP. Only CIP and CIF make the seller insure the goods.

Incoterms 2020: delivery, carriage, clearance and insurance
RuleRisk passesMain carriage paid byExport clearanceImport clearanceInsurance
Any mode of transport
EXWEx Works At the seller’s premisesBuyerBuyerBuyerNeither side has to insure
FCAFree Carrier Handed to the buyer’s carrierBuyerSellerBuyerNeither side has to insure
CPTCarriage Paid To Handed to the first carrierSellerSellerBuyerNeither side has to insure
CIPCarriage and Insurance Paid To Handed to the first carrierSellerSellerBuyerSeller, Institute Cargo Clauses (A)
DAPDelivered at Place At the named place, ready for unloadingSellerSellerBuyerNeither side has to insure
DPUDelivered at Place Unloaded Unloaded at the named placeSellerSellerBuyerNeither side has to insure
DDPDelivered Duty Paid At the named place, cleared for importSellerSellerSellerNeither side has to insure
Sea and inland waterway
FASFree Alongside Ship Alongside the vesselBuyerSellerBuyerNeither side has to insure
FOBFree on Board On board the vesselBuyerSellerBuyerNeither side has to insure
CFRCost and Freight On board the vesselSellerSellerBuyerNeither side has to insure
CIFCost, Insurance and Freight On board the vesselSellerSellerBuyerSeller, at least Institute Cargo Clauses (C)

Choosing a rule when you import

Containers: FCA rather than FOB. ICC recommends FCA for goods in containers. A container is usually handed over at a terminal days before it is loaded, while FOB, FAS, CFR and CIF are meant for goods loaded straight onto the vessel.

Buying from a factory: FCA rather than EXW. Under EXW the buyer has to handle export clearance in the seller’s country, so ICC encourages FCA whenever goods cross a border.

DDP isn’t always possible. Some countries require a local importer to clear the goods, and then the seller can’t act under DDP. DAP is the usual alternative, with the buyer clearing import.

Read the C rules carefully. Under CPT, CIP, CFR and CIF the seller pays for carriage to the destination, but the risk passes back at origin. Charges at the destination terminal depend on what the seller’s contract of carriage covers, so settle them in the sales contract.

Once you know who pays which leg, put the numbers together with the landed cost calculator. Moving the goods inland as LTL? Find the class with the freight class calculator.

Common questions

What is the difference between FOB and CIF?

Under both, risk passes to the buyer once the goods are on board the vessel at the port of shipment. Under FOB the buyer then pays the ocean freight and decides on insurance; under CIF the seller pays freight to the destination port and must insure the goods, at least to Institute Cargo Clauses (C).

Which rule should I use for container shipments?

ICC recommends FCA rather than FOB for goods in containers. Containers are usually handed over at a terminal days before loading, and FOB, FAS, CFR and CIF are meant for goods loaded straight onto the vessel.

Who pays import duty under DDP?

The seller. DDP is the only rule where the seller clears the goods for import and pays the duties and taxes. Some countries require a local importer to clear goods, and then DDP can’t be used; DAP is the usual alternative.

What is the difference between DAP and DPU?

Unloading. Under DPU the seller unloads the goods at the named place, which can be any place, and bears the risk until they are unloaded. Under DAP the buyer unloads.

Is EXW a good choice for importing?

ICC encourages traders to use FCA instead of EXW when goods cross a border, because under EXW the buyer has to handle export clearance in the seller’s country.

Sources

Checked 2026-10-28. Rules change; confirm with the carrier or agency before you rely on a number.

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