Incoterms 2020

Incoterms 2020 are standardized trade terms issued by International Chamber of Commerce (ICC)

EXW – Ex Works (at a specified place) (from factory at a specified place) The seller delivers the goods at its premises without export documents and not loaded on a conveyance. If the parties choose for the seller to be responsible for loading the transport vehicle and to bear its costs and risks, it is essential that this be clearly stated in the sales contract.

FCA – Free Carrier (named place) (free to carrier at named place) The seller delivers the goods to the carrier, nominated by the buyer, at the place named in the contract. These terms apply to all modes of transport, including air, rail, or road, and multimodal transport of containerized goods. The seller shall complete the export documentation and pay the associated costs.

FAS – Free alongside ship (Ex-ship) The seller must deliver the goods alongside the ship in the designated port. The seller must clear the goods for export and pay the associated duties. These terms apply only to sea or river and lake transport.

FOB – Free on board (named port of shipment) (free on board) Delivery takes place when the goods have passed over the ship's side on a vessel designated by the buyer. This means that the buyer bears all costs and risk for the goods from that time. The seller is responsible for completing the export documentation and paying the associated fees. This term applies only to transport by sea, river, and lake and is not suitable for multimodal and container transport.

CFR – Cost and freight (named port of destination) (CIF term: purchase price and freight prepaid to the named port) The seller is obligated to pay the costs and freight to deliver the goods to the designated port of destination. Delivery occurs, however, and the risk, e.g., of cargo loss, passes to the buyer as soon as the goods are loaded over the ship's rail. The term applies only to transport by sea, river, and lake and is not suitable for multimodal and container transport.

CIF – Cost, Insurance and Freight (named port of destination) (purchase price, insurance and freight prepaid to the named port of discharge) Exactly the same as CFR, except that the seller must also arrange and pay for insurance on the goods. The seller is only required to pay for minimum insurance unless otherwise specified in the contract. The term applies only to transport by sea, river, and lake and is not suitable for multimodal and container transport.

CPT – Carriage paid to (named place of destination): (freight paid to the named port of discharge) The seller delivers the goods to the carrier appointed by him and must in addition pay the freight charges to the named destination. Risk and all other costs after such delivery shall be borne by the buyer. These terms may be used for all transport, including multimodal and container transport.

CIP – Carriage and insurance paid to (named place of destination): (freight and insurance paid to the named destination) The seller delivers the goods to the carrier appointed by him and must also pay the freight charges to the named destination. Risk and any other costs after such delivery shall pass to the buyer. However, when using CIP terms, the shipper must also purchase insurance against the buyer's risk of loss or damage to the goods in transit. These terms may be used for all modes of transport, including multimodal and container transport.

DAF – Delivery at Frontier (named place) (delivered at border, at a specified place) The seller has effected delivery of the goods when they are made available to the buyer, not unloaded from the means of transport, ready but not cleared for export, at the specified place at the border. This can be any border, including in the country of export, and it is therefore essential that the border and location are specified precisely. If the parties want the seller to arrange for unloading from the transport vehicle and bear responsibility for any resulting damage, this must be stated clearly. This term can apply to land transport and may, for example, be used for multimodal and container shipments.

Delivered at Terminal (Delivered at the specified port, import duties unpaid) The seller bears all risks and costs to the point of the specified port of shipment, the goods unloaded from the transport vehicle. The buyer is responsible for completing import documentation, obtaining import permits, and paying import duties. It is important that the contract specifies the port of shipment.

DAP – Delivered Duty Paid (named port of destination) (delivered, import duties paid at the named destination) The seller bears the cost and risk up to the named destination, the goods unloaded from the means of transport. The buyer, however, must obtain import permits and pay import duties. It is essential that the contract clearly specify exactly which destination point is intended, as otherwise the seller may choose the location within that area that best suits him.

Delivered Duty Paid (named place of destination) (delivered, freight charges paid to the named destination) The seller bears the costs and risks up to the named destination, the goods cleared through customs but not unloaded from the means of transport. These terms place the greatest obligations on the seller. It is crucial that the contract clearly states the exact location at the destination where delivery is to take place, as otherwise the seller can choose the location that is most convenient for them within that area.If the parties wish to exclude any charges payable upon the importation of goods, e.g., value-added tax, this must be stated clearly in the sales contract.