Incoterms 2020 Delivery Rules
Incoterms are the ICC's eleven trade rules. All of them in a table and one by one, with the risk point, cost split, 2020 changes and a worked price build-up.
Incoterms, short for International Commercial Terms, are the eleven three-letter trade rules published by the International Chamber of Commerce (ICC). Written into a sale contract, each term says where the seller delivers, at what moment the risk of loss moves to the buyer, and who arranges carriage, insurance and customs clearance. The edition in force is Incoterms 2020, in use since 1 January 2020. Seven rules work with any mode of transport and four are reserved for sea and inland waterway carriage.[1] The ICC's 2026 workplan lists the start of work on an Incoterms 2030 revision, but no new text or publication date has been announced.[2]
Legal Status and Scope of the Rules
Incoterms have no force of their own. They are not legislation or a treaty, and they apply because the parties incorporate them. A sound clause has three elements: the rule, the named place and the edition, as in "FOB Felixstowe, Incoterms 2020". The more precisely the place is described, the less room there is for argument about the delivery point. Parties remain free to choose an older edition.
Plenty is left outside the rules. Price, payment terms, transfer of title and the consequences of breach belong to the sale contract and its governing law. The contract of carriage is also separate, so the Incoterms rule between seller and buyer does not define the carrier's liability.
Each rule follows the same layout. Articles A1 to A10 set out the seller's obligations and B1 to B10 the buyer's. Delivery sits at A2, carriage at A4 and insurance at A5, while the 2020 edition gathers every cost allocation into A9 and B9.[1]
The ICC began work on trade terms in 1923 and published the first Incoterms in 1936. Revisions followed in 1953, 1967, 1976, 1980, 1990, 2000, 2010 and 2020.[3]
The Eleven Rules in One Table
Two columns deserve to be read side by side. "Risk passes" marks the point after which loss or damage falls on the buyer. "Main carriage" shows who pays the freight. The gap between them is the feature of Incoterms that causes the most trouble in practice.
| Rule | Mode | Risk passes | Main carriage | Export clearance | Import clearance | Insurance duty |
|---|---|---|---|---|---|---|
| EXW | Any | At seller's premises, at buyer's disposal | Buyer | Buyer | Buyer | None |
| FCA | Any | On handover to the carrier | Buyer | Seller | Buyer | None |
| CPT | Any | On handover to the first carrier | Seller | Seller | Buyer | None |
| CIP | Any | On handover to the first carrier | Seller | Seller | Buyer | Seller, ICC (A) |
| DAP | Any | At destination, on the arriving vehicle | Seller | Seller | Buyer | None |
| DPU | Any | At destination, unloaded | Seller | Seller | Buyer | None |
| DDP | Any | At destination, on the arriving vehicle | Seller | Seller | Seller | None |
| FAS | Sea, inland water | Alongside the ship at load port | Buyer | Seller | Buyer | None |
| FOB | Sea, inland water | On board at load port | Buyer | Seller | Buyer | None |
| CFR | Sea, inland water | On board at load port | Seller | Seller | Buyer | None |
| CIF | Sea, inland water | On board at load port | Seller | Seller | Buyer | Seller, ICC (C) |
"None" under insurance means only that neither party owes cover to the other. Whoever carries the risk at a given stage will normally buy a policy to protect its own interest.
Seven Rules for Any Mode of Transport
EXW: Ex Works
The seller simply makes the goods available at its premises or another named place. Loading is not its duty, and export clearance falls on the buyer along with everything after it. This is the minimum obligation for a seller, yet a foreign buyer may be unable to complete export formalities in the seller's country. For cross-border sales FCA is often the more workable choice.
FCA: Free Carrier
The seller clears the goods for export and hands them to the carrier or other person the buyer nominates at the named place. If that place is the seller's own premises, the seller loads. Anywhere else, delivery happens with the goods still on the seller's vehicle, ready for unloading. Since 2020 the parties may agree that the buyer will instruct its carrier to issue an on-board bill of lading to the seller after loading, which solves a common problem under letters of credit.[1]
CPT: Carriage Paid To
The seller contracts and pays for carriage to the named destination, but risk moves to the buyer as soon as the first carrier takes the goods. No insurance duty arises. Since the seller's cost runs far beyond the point where its risk stops, the buyer needs its own transit cover.
CIP: Carriage and Insurance Paid To
CIP adds cargo insurance to the CPT structure. The seller must provide cover for at least 110% of the contract value, at the level of Institute Cargo Clauses (A) or similar.[1] The buyer must be able to claim directly under the policy. A lower level of cover is possible if the parties expressly agree to it.
DAP: Delivered at Place
Goods travel at the seller's cost and risk to the named place and are placed at the buyer's disposal on the arriving vehicle, ready for unloading. Unloading, import clearance and duties are for the buyer. If the seller's carriage contract includes unloading costs at destination, the seller cannot recover them from the buyer unless the parties have agreed otherwise.
DPU: Delivered at Place Unloaded
This is the only rule under which the seller must unload. It replaced DAT, whose name suggested a terminal, and the destination may now be any place.[1] A seller who cannot organise unloading at destination should use DAP.
DDP: Delivered Duty Paid
DDP is the heaviest rule for a seller, who delivers in the buyer's country, clears the goods for import and pays duties and taxes. It depends on the seller being able to obtain registrations and permits in that country, so local customs rules need checking before it goes into a contract.
Four Rules for Sea and Inland Waterway
The named place in these rules is a port. FAS and FOB name the port of shipment, while CFR and CIF name the destination port, and yet delivery under all four takes place at the loading end. A seller may also perform by procuring goods already shipped, which suits commodity cargoes sold several times while afloat.
FAS: Free Alongside Ship
Delivery occurs when the goods are placed alongside the buyer's nominated vessel, on the quay or on a barge. The buyer pays for loading and the seller handles export formalities.[4] The rule appears mainly with bulk cargoes and heavy pieces.
FOB: Free on Board
The seller loads the goods on the vessel the buyer has nominated, and delivery is complete once they are on board. The buyer charters or books the ship, pays the freight and must give timely notice of the vessel's name and the delivery point.[4] The old ship's rail test disappeared in the 2010 edition.
CFR: Cost and Freight
The seller books the ship and pays freight to the destination port, but risk passes at the load port exactly as under FOB. Damage at sea is the buyer's loss even though the seller paid for the voyage.
CIF: Cost, Insurance and Freight
CIF adds an insurance duty to CFR. The minimum is Institute Cargo Clauses (C) for at least 110% of the contract value, and the parties may agree a higher level.[1] The split between (A) under CIP and (C) under CIF is deliberate. CIF remains a commodity term, whereas the limited perils of Clauses (C) may leave manufactured goods underinsured.
Worked Price Build-Up
A simple build-up shows how the choice of rule feeds into a quotation. All amounts here are assumptions used only to illustrate the arithmetic. The seller's ex-works price is USD 100,000.
| Cost item | USD | Rule reached | Running price (USD) |
|---|---|---|---|
| Ex-works price | 100,000 | EXW | 100,000 |
| Haulage to port and export clearance | 1,800 | FAS | 101,800 |
| Loading on board | 400 | FOB | 102,200 |
| Ocean freight to destination | 3,000 | CFR | 105,200 |
| Marine insurance premium | 250 | CIF | 105,450 |
If the cargo is damaged in mid-ocean under this CIF sale, the loss still belongs to the buyer. The buyer then claims against the insurer under the policy the seller arranged. Minimum cover in this example is 110% of USD 105,450, or about USD 116,000.
What Changed in the 2020 Edition
According to the ICC, the on-board bill of lading option came into FCA, costs were consolidated in A9 and B9, minimum cover under CIP rose to Clauses (A), and DAT became DPU. The rules now accept that carriage does not always involve a third party, so parties may use their own transport. Security requirements are also spelled out in more detail in A4 and A7, with the related costs placed in A9 and B9.[1]
Frequent Errors in Practice
FOB on containerised cargo is the classic one. The box goes to the terminal and may wait there for days before loading. Under FOB, the seller would stay on risk throughout that period with no control over the goods, and for this reason the ICC recommends FCA instead.[4][5] The same reasoning points to CPT over CFR and CIP over CIF for containers. On breakbulk and bulk cargoes the maritime rules remain appropriate.
US contracts bring a second trap. FOB under the Uniform Commercial Code applies by default in adopting states, can be used for any mode, and ends the seller's duty at the named location. Incoterms FOB covers sea and inland waterway carriage only and binds the parties only if incorporated.[6] Writing "Incoterms 2020" into the clause settles which one is meant.
Links to Freight and Bunker Contracts
The rule also decides who deals with the ship. Under FOB the buyer fixes the vessel and pays the freight, whereas CFR and CIF put that task on the seller, and exposure to demurrage tends to follow. Marine fuel itself is rarely sold on Incoterms. Supplies of fuel oil and gas oil are normally governed by the seller's general terms or standard wordings such as BIMCO's bunker terms.
Frequently asked questions
What are Incoterms?
Incoterms, short for International Commercial Terms, are the eleven three-letter trade rules published by the ICC. Each says where the seller delivers, when risk moves to the buyer and who arranges carriage, insurance and customs clearance.
What are the 11 Incoterms?
For any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU and DDP. For sea and inland waterway: FAS, FOB, CFR and CIF.
Which Incoterm suits container shipments?
FCA, CPT or CIP. A container is handed over at the terminal before loading, which is why the ICC points away from FOB, CFR and CIF for boxes.
Can Incoterms 2010 still be used?
Yes, if the contract says so. An older edition does not lapse automatically, which is why the edition year should always be stated.
Do Incoterms decide when ownership passes?
No. They deal with delivery, risk and costs. Title depends on the contract and the governing law.
What separates FOB from CIF?
Risk passes at the same point under both, on board at the load port. Under FOB the buyer arranges the ship and insurance, while under CIF the seller pays freight and provides minimum cover.
Has Incoterms 2030 been published?
Not as of 4 November 2026. The ICC's 2026 workplan foresees the start of revision work.
Sources
- ICC. Incoterms 2020, overview of the rules and changes.
- DHL. Next Incoterms Revision, reporting the ICC Global Policy Commissions Workplan 2026, 2026.
- ICC. DC Insight, Volume 15 Number 1, article on Incoterms.
- ICC Academy. Incoterms 2020: FAS or FOB.
- ICC Academy. Incoterms 2020: FCA or FOB.
- Quarles and Brady. Supply Chain Survival Series: Shipping Terms Under the UCC and Incoterms.
