Incoterms 2020 are the 11 standardised three-letter trade terms published by the International Chamber of Commerce (ICC) that define exactly where a seller's responsibility ends and a buyer's begins in international trade — covering transport costs, risk transfer, export and import clearance, and insurance. Incoterms 2020 entered into force on 1 January 2020 and remain the current version in 2026; the ICC has indicated a revision (working title "Incoterms 2030") is in preparation but not yet published.
Table of contents
- What are Incoterms 2020?
- Why Incoterms exist (the function)
- All 11 Incoterms 2020 at a glance (comparison table)
- How Incoterms become legally binding
- Changes from Incoterms 2010 to Incoterms 2020
- Incoterms for any transport mode
6.1 EXW – Ex Works
6.2 FCA – Free Carrier
6.3 CPT – Carriage Paid To
6.4 CIP – Carriage and Insurance Paid To
6.5 DAP – Delivered at Place
6.6 DPU – Delivered at Place Unloaded (was DAT)
6.7 DDP – Delivered Duty Paid - Incoterms for sea and inland waterway only
7.1 FAS – Free Alongside Ship
7.2 FOB – Free on Board
7.3 CFR – Cost and Freight
7.4 CIF – Cost, Insurance and Freight - Which Incoterm should you choose? (decision helper)
- FAQ: Incoterms 2020
What are Incoterms 2020?
Incoterms (short for International Commercial Terms) are 11 three-letter rules published by the International Chamber of Commerce. Each rule answers four core questions about a shipment: who arranges transport, who pays for it, where risk passes from seller to buyer, and who handles export and import clearance. Incoterms 2020 is the current edition, in force since 1 January 2020.
A correctly-cited Incoterm in a sales contract — for example "FCA Frankfurt Airport, Incoterms 2020" — eliminates the most common dispute in cross-border trade: who is responsible if the goods are lost, damaged, delayed at customs or hit with unexpected fees. Incoterms apply to physical goods only and are silent on payment terms, transfer of title and product liability.
Incoterms 2020: overview of all 11 rules
Why Incoterms exist
When a German shipper sells a pallet to a French buyer, both sides need to agree — before the truck leaves — on who arranges the carrier, who pays which leg, who covers insurance, who clears export, who clears import, and at exactly which physical point risk transfers. Without a shared vocabulary, each contract would have to spell all of this out from scratch. The ICC introduced Incoterms in 1936 to compress those answers into three letters plus a named place.
Incoterms have been revised roughly every 10 years (1980, 1990, 2000, 2010, 2020). The 2020 revision is current and the ICC has begun preparatory work on the next edition. Specifying the version in the contract is essential — "DAP Madrid, Incoterms 2020" is unambiguous, "DAP Madrid" alone is not.
All 11 Incoterms 2020 at a glance
The table below summarises the 11 rules along the four dimensions that matter most: transport mode, who pays transport, who clears export and import, and where risk transfers from seller to buyer.
How Incoterms become legally binding
Incoterms are not laws. They only apply if the sales contract explicitly references them, and the version year must be named — for example "DDP Munich, Incoterms 2020". Without that reference, even universally-known terms like "FOB" have no legal effect in the contract.
Incoterms do not cover everything. They are silent on payment terms, when ownership (title) transfers, product liability, warranty for defects, force majeure, and the legal consequences of breach of contract. The sales contract must still address those points separately. What Incoterms do regulate — definitively — is the export/import/transport split and the precise point of risk transfer.
Changes from Incoterms 2010 to Incoterms 2020
The 2020 revision is more an evolution than a rewrite. Five material changes:
- DAT renamed to DPU (Delivered at Place Unloaded). DPU is no longer restricted to terminals — any named place where the seller can unload is now allowed.
- CIP insurance level raised from Institute Cargo Clauses (C) — minimum cover — to ICC (A) — all-risks cover. CIF stays at ICC (C), reflecting commodity-trade practice.
- FCA now permits an on-board bill of lading by mutual arrangement. The buyer can instruct the carrier to issue the bill of lading to the seller, useful when the seller needs it for a letter of credit.
- Seller's or buyer's own transport explicitly allowed for FCA, DAP, DPU, DDP. Previous editions assumed a third-party carrier.
- Security obligations and cost allocations spelled out in each rule, replacing the catch-all references of the 2010 edition.
Incoterms for any mode of transport
These seven rules work for road, rail, air, sea, inland waterway and multimodal shipments. They are the right starting point for any non-bulk cargo and for nearly all road freight in Europe.
EXW – Ex Works
EXW – Ex Works
Under EXW, the seller's only job is to make the packed goods available at their own premises (factory, warehouse, depot). Everything from that point onward — loading, transport, export clearance, import clearance, all costs and all risk — is the buyer's. EXW puts maximum responsibility on the buyer and is the rule with the smallest seller obligation of any Incoterm.
Common pitfall: the buyer often cannot legally complete export clearance from outside the country of departure. For cross-border trade, FCA is usually a cleaner substitute.
FCA – Free Carrier
FCA – Free Carrier
Under FCA, the seller delivers the export-cleared goods to a carrier nominated by the buyer at a named place. If the named place is the seller's premises, the seller is responsible for loading. If it is any other location, the goods are simply made available on the seller's means of transport, ready for unloading. Risk and main-transport cost transfer to the buyer at that handover point.
FCA is the most flexible of the 11 rules and the most commonly recommended choice for containerised and road freight, replacing both EXW (cleaner export clearance) and FOB (which formally only fits bulk and break-bulk sea cargo, even though it is widely misused for containers).
New in 2020: the buyer and seller can agree that the carrier issues an on-board bill of lading to the seller — useful when the seller needs the document to draw on a letter of credit.
CPT – Carriage Paid To
CPT – Carriage Paid To
Under CPT, the seller arranges and pays for transport to the named destination — but risk transfers earlier, when the goods are handed to the first carrier. This split between cost and risk is the most counter-intuitive feature of the C-group rules and a frequent source of disputes. The seller handles export clearance; the buyer handles import.
CIP – Carriage and Insurance Paid To
CIP – Carriage and Insurance Paid To
CIP is CPT plus a seller-paid insurance obligation. In Incoterms 2020, that insurance must be at the ICC (A) all-risks level — a meaningful upgrade from the 2010 edition's minimum-cover requirement. The minimum sum insured is 110% of the contract price, in the contract currency. As with CPT, risk still passes at the first carrier; the insurance simply makes sure the buyer is covered for the in-transit risk it bears.
DAP – Delivered at Place
DAP – Delivered at Place
Under DAP, the seller pays and bears all risk to deliver the goods to a named place in the buyer's country, ready for unloading but not unloaded. Export is the seller's responsibility; import clearance and duties are the buyer's. DAP is the right choice when the seller can arrange door delivery efficiently but does not want to act as importer of record in the destination country.
DPU – Delivered at Place Unloaded (replaces DAT)
DPU – Delivered at Place Unloaded
DPU is the only renamed rule in the 2020 revision. It replaces DAT (Delivered at Terminal) and removes the restriction that the named place has to be a terminal — it can now be any agreed location where the seller is able to physically unload. DPU is the only Incoterm that requires the seller to unload; in every other D-rule the goods are delivered ready for unloading but the buyer or its agent does the actual work.
Practical note: agree the place in detail (specific street address, dock, ramp) because the seller must be able to safely complete the unload. Contracts referring to "Incoterms 2010 DAT" remain valid but should be renegotiated to DPU 2020 at renewal.
DDP – Delivered Duty Paid
DDP – Delivered Duty Paid
DDP is the maximum-seller-obligation rule: the seller handles everything — export, transport, insurance (optional but advisable), import clearance, duties, VAT in the destination country — and only releases the goods to the buyer ready for unloading at the agreed place. DDP is attractive for the buyer (turn-key delivery) but exposes the seller to foreign tax and customs obligations it may not be set up to handle. Many sellers price DDP generously to cover that risk.
Incoterms for sea and inland waterway only
These four rules apply only when the main carriage is by ship. The ICC specifically warns against using FOB, CFR or CIF for containerised cargo — even though it remains common practice — because risk in those rules transfers at the ship's rail, while a container is in fact handed over to the carrier at a terminal hours or days earlier. For containers, the equivalent any-mode rules (FCA, CPT, CIP) are technically correct.
FAS – Free Alongside Ship
FAS – Free Alongside Ship
Under FAS, the seller handles export and delivers the goods alongside the ship (on the quay or on a barge) at the named port. Once placed alongside, cost and risk transfer to the buyer. FAS suits bulk and break-bulk commodities like grain, ores or steel — not containerised cargo.
FOB – Free on Board
FOB – Free on Board
FOB extends FAS by requiring the seller to actually load the goods on board the ship. Cost and risk transfer at the moment the goods are placed on the vessel. Like FAS, FOB is designed for bulk and break-bulk cargo. For containers, FCA is the proper rule even though FOB is widely used informally.
CFR – Cost and Freight
CFR – Cost and Freight
Under CFR, the seller pays the sea freight to the named destination port, but risk passes once the goods are on board at the origin port — exactly as under FOB. The split between cost and risk catches first-time CFR users out: a damaged cargo at sea is the buyer's problem, even though the seller is still paying for the voyage.
CIF – Cost, Insurance and Freight
CIF – Cost, Insurance and Freight
CIF is CFR plus a seller-paid marine insurance obligation. The minimum cover is ICC (C) — much narrower than the all-risks (A) cover required under CIP. ICC (C) is acceptable for commodities where buyer and seller routinely top up with their own policy, which is why the ICC kept CIF at this level when it raised CIP. The minimum sum insured is 110% of the contract price.
Which Incoterm should you choose?
There is no universally correct rule — the right Incoterm depends on the cargo, the route, who has the better freight rates, and which party is set up to handle customs in each country. The following heuristics cover the vast majority of European road freight decisions:
Once the Incoterm is agreed, the operational job begins: how much toll does each route cost, what is a realistic lead time, and how do shipper, driver and subcontractor stay on the same page? IMPARGO is a cloud-based transport management platform (TMS) from Germany. The Planner Module calculates per-country toll costs for every European lane with a configurable VAT toggle (with or without VAT) and lets dispatchers compare route variants side-by-side — the choice between, say, a toll-heavy motorway run and a mixed B-road alternative stays with the dispatcher, not with a black-box algorithm. Order execution is handled by the driver app, a receiver portal for ETA updates, and a subcontractor module for external task assignment. Read more about the related transport documentation in our guide to the CMR consignment note or the loading meter (LDM) calculation.
