Incoterms 2020 Reference Guide
International Commercial Terms by ICC
Incoterms (International Commercial Terms) are standardized trade terms published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers in international transactions.
11 Standard Terms
ICC-published rules defining buyer and seller responsibilities
2 Categories
Any mode of transport (7) and Sea/Inland waterway only (4)
Effective Since 2020
Latest version with updated insurance and security requirements
Any Mode of Transport
Can be used for any mode of transport including multimodal
Ex Works
The seller makes goods available at their premises or another named place. This is the minimum obligation for the seller.
Seller Responsibilities
- Package goods for collection
- Make goods available at named place
Buyer Responsibilities
- All transport costs
- Export clearance
- Import clearance
- Insurance
- Loading at origin
Best for: Buyers with strong logistics capabilities who want maximum control
Free Carrier
The seller delivers goods to a carrier or another person nominated by the buyer at the seller's premises or another named place.
Seller Responsibilities
- Export clearance
- Deliver to carrier at named place
- Loading (if at seller's premises)
Buyer Responsibilities
- Main carriage
- Import clearance
- Insurance
- Unloading at destination
Best for: Most versatile term - works for any mode of transport
Carriage Paid To
The seller pays for carriage to the named destination, but risk transfers to buyer when goods are handed to the first carrier.
Seller Responsibilities
- Export clearance
- Carriage to destination
- Delivery to first carrier
Buyer Responsibilities
- Import clearance
- Insurance (recommended)
- Unloading
- Risk from first carrier
Best for: When seller arranges transport but buyer accepts risk during transit
Carriage and Insurance Paid To
Same as CPT, but seller must also obtain insurance covering the buyer's risk during carriage.
Seller Responsibilities
- Export clearance
- Carriage to destination
- Insurance (ICC A or equivalent)
Buyer Responsibilities
- Import clearance
- Unloading
- Risk from first carrier (covered by insurance)
Best for: High-value goods requiring insurance protection during transit
Delivered at Place
The seller delivers when goods are placed at the buyer's disposal on the arriving means of transport, ready for unloading at the named destination.
Seller Responsibilities
- Export clearance
- All carriage to destination
- Risk until destination
- Insurance (recommended)
Buyer Responsibilities
- Import clearance
- Unloading
- Import duties and taxes
Best for: Door-to-door delivery where buyer handles import formalities
Delivered at Place Unloaded
The seller delivers when goods are unloaded from the arriving means of transport at the named destination. The only Incoterm requiring seller to unload.
Seller Responsibilities
- Export clearance
- All carriage
- Unloading at destination
- Risk until unloaded
Buyer Responsibilities
- Import clearance
- Import duties and taxes
Best for: When seller has unloading capabilities at destination
Delivered Duty Paid
Maximum obligation for seller. The seller delivers goods cleared for import, with all duties and taxes paid, at the named destination.
Seller Responsibilities
- Export clearance
- All carriage
- Import clearance
- All duties and taxes
- Risk until destination
Buyer Responsibilities
- Unloading (unless agreed otherwise)
Best for: Turnkey solution - buyer receives goods ready to use
Sea and Inland Waterway Transport
Exclusively for sea and inland waterway transport
Free Alongside Ship
The seller delivers when goods are placed alongside the vessel at the named port of shipment.
Seller Responsibilities
- Export clearance
- Deliver alongside vessel at port
Buyer Responsibilities
- Loading onto vessel
- Main carriage
- Import clearance
- Insurance
Best for: Bulk cargo or when buyer has strong shipping arrangements
Free on Board
The seller delivers goods on board the vessel at the named port of shipment. Risk transfers when goods are on board.
Seller Responsibilities
- Export clearance
- Deliver on board vessel
- Loading costs
Buyer Responsibilities
- Main carriage (ocean freight)
- Import clearance
- Insurance
- Unloading
Best for: Traditional sea freight when buyer wants to control shipping
Cost and Freight
The seller pays costs and freight to bring goods to the destination port, but risk transfers when goods are on board at origin.
Seller Responsibilities
- Export clearance
- Loading
- Ocean freight to destination port
Buyer Responsibilities
- Insurance (highly recommended)
- Import clearance
- Unloading
- Onward transport
Best for: Sea freight when seller arranges shipping but buyer bears transit risk
Cost, Insurance and Freight
Same as CFR, but seller must also obtain insurance covering buyer's risk during sea carriage (minimum coverage).
Seller Responsibilities
- Export clearance
- Loading
- Ocean freight
- Insurance (ICC C minimum)
Buyer Responsibilities
- Import clearance
- Unloading
- Onward transport
- Additional insurance if needed
Best for: Common for commodities and when basic insurance coverage is sufficient
Quick Comparison: Seller Obligations
| Incoterm | Export | Loading | Carriage | Insurance | Unloading | Import |
|---|---|---|---|---|---|---|
| EXW | ||||||
| FCA | ||||||
| FAS | ||||||
| FOB | ||||||
| CFR | ||||||
| CIF | ||||||
| CPT | ||||||
| CIP | ||||||
| DAP | ||||||
| DPU | ||||||
| DDP |
Seller's responsibility | Conditional/Partial | Buyer's responsibility
Need Help Choosing the Right Incoterm?
The right Incoterm can save thousands in costs and prevent disputes. Let MLCI help you negotiate favorable terms with your trading partners.
Book Consultation