Incoterms® 2020: Complete Guide to the 11 International Trade Terms
Incoterms® (International Commercial Terms) are 11 standardized trade rules published by the International Chamber of Commerce (ICC). They define key buyer and seller responsibilities for delivery, transport costs, customs formalities and the transfer of risk in international trade.
The 11 Incoterms® Rules
Published by the International Chamber of Commerce. The current rules are Incoterms® 2020.
What Are Incoterms?
Incoterms® are a set of 11 standardized trade rules published by the International Chamber of Commerce that define how key delivery responsibilities, costs and risks are divided between a seller and a buyer.
Buyers and sellers use Incoterms® in a contract of sale to identify where delivery takes place, which party arranges particular stages of transport, and when risk transfers from seller to buyer.
Incoterms® 2020 is the current edition of the Incoterms® rules. The 11 rules are divided into seven rules for any mode or modes of transport and four rules for sea and inland waterway transport.
Official framework: Incoterms® rules are published by the International Chamber of Commerce .
11 Standardized Trade Rules
Incoterms® 2020 contains 11 rules covering different delivery arrangements between buyers and sellers.
Delivery, Costs and Risk
Each rule identifies important obligations connected with delivery, transportation costs, export or import formalities and the transfer of risk.
7 Multimodal + 4 Maritime Rules
Seven rules apply to any transport mode, while FAS, FOB, CFR and CIF are designed for sea and inland waterway transport.
Part of the Sales Agreement
The selected Incoterm should be stated together with a clearly identified named place or port and the applicable Incoterms® edition.
What Incoterms Define
- Where and how the seller delivers the goods
- Which party arranges and pays certain transport costs
- When risk transfers from seller to buyer
- Responsibilities for export and import formalities
- Certain insurance obligations under CIP and CIF
What Incoterms Do Not Define
- The sale price or payment method for the goods
- When ownership or title to the goods transfers
- Product specifications or quality requirements
- Remedies available when a contract is breached
- Every term required in a complete sales contract
Incoterms® 2020 Chart: Costs, Risk and Responsibilities
Compare all 11 Incoterms® rules by transport mode, point of delivery and risk transfer, main carriage, export clearance, import clearance and duties, and insurance obligations.
Cost responsibility and risk transfer are not always the same. Under CPT, CIP, CFR and CIF, the seller pays for carriage toward the destination, but risk transfers earlier at the agreed delivery point.
| Rule | Transport | Delivery / Risk Transfers | Main Carriage | Export Clearance | Import Clearance & Duties | Insurance |
|---|---|---|---|---|---|---|
| Any Mode or Modes of Transport · 7 Rules | ||||||
| EXW Ex Works | Any mode | Goods placed at buyer's disposal at the named place, not loaded | Buyer | Buyer | Buyer | Not required |
| FCA Free Carrier | Any mode | When goods are delivered to the carrier or person nominated by the buyer | Buyer | Seller | Buyer | Not required |
| CPT Carriage Paid To | Any mode | When goods are delivered to the carrier contracted by the seller | Seller | Seller | Buyer | Not required |
| CIP Carriage & Insurance Paid To | Any mode | When goods are delivered to the carrier contracted by the seller | Seller | Seller | Buyer | Seller required |
| DAP Delivered at Place | Any mode | At named destination, on arriving transport and ready for unloading | Seller | Seller | Buyer | Not required |
| DPU Delivered at Place Unloaded | Any mode | At named destination after the seller has unloaded the goods | Seller | Seller | Buyer | Not required |
| DDP Delivered Duty Paid | Any mode | At named destination, cleared for import and ready for unloading | Seller | Seller | Seller | Not required |
| Sea & Inland Waterway Transport · 4 Rules | ||||||
| FAS Free Alongside Ship | Sea / inland waterway | When goods are placed alongside the vessel at the named port of shipment | Buyer | Seller | Buyer | Not required |
| FOB Free on Board | Sea / inland waterway | When goods are on board the vessel at the named port of shipment | Buyer | Seller | Buyer | Not required |
| CFR Cost and Freight | Sea / inland waterway | When goods are on board the vessel at the port of shipment | Seller | Seller | Buyer | Not required |
| CIF Cost, Insurance & Freight | Sea / inland waterway | When goods are on board the vessel at the port of shipment | Seller | Seller | Buyer | Seller required |
Customs: EXW is the exception where the buyer handles export clearance. DDP is the exception where the seller handles import clearance and applicable import duties and taxes.
Insurance: Only CIP and CIF impose an Incoterms® insurance obligation on the seller. The required level of insurance coverage differs between the two rules.
Named place matters: The exact place, port or delivery point should be clearly stated in the sales contract together with “Incoterms® 2020.”
The 11 Incoterms® 2020 Rules
Incoterms® 2020 groups the 11 trade rules by the type of transport they are designed to cover. Seven rules may be used with any mode or combination of transport, while four are intended specifically for sea and inland waterway transport. Review each rule below; linked terms open dedicated guides where available.
The Incoterm should match the actual shipment arrangement. Transport mode, the named place or port, customs responsibilities and the point of risk transfer should be considered together rather than choosing a rule only by freight cost.
Delivery, Costs and Risk Are Not the Same
Incoterms® allocate delivery obligations, transportation costs and risk between the seller and buyer. These responsibilities do not always move together, so the party paying the freight may no longer carry the risk for the goods.
C terms are the clearest example: under CPT, CIP, CFR and CIF, the seller pays for main carriage toward the destination, while risk transfers earlier at the contractual delivery point.
How Responsibility Changes Across the Rule Groups
Origin-side delivery → destination delivery
Seller Delivers Earliest
Goods are made available at the named place and the buyer assumes most onward transport responsibility.
Buyer Books Main Carriage
Seller delivers at the agreed origin-side point; buyer generally arranges the main international carriage.
Seller Pays, Risk Moves Earlier
Seller contracts the main carriage, but risk transfers before the goods reach the named destination.
Seller Delivers at Destination
Seller carries the shipment and associated transport risk to the agreed destination delivery point.
Who Pays for the Transport?
The selected rule determines which party contracts and pays for particular stages of transportation and related logistics costs.
Where Does Risk Transfer?
Risk transfers at the delivery point defined by the selected rule. This is the point at which the risk of loss of or damage to the goods passes from seller to buyer, even if the seller continues to pay the main freight.
How to Choose an Incoterm When Shipping From China
The right Incoterm depends on the actual shipment arrangement, not simply on which term appears most convenient. Transport mode, delivery location, main-carriage responsibility, customs clearance and risk transfer should all be considered before the sales contract is finalized.
Start With the Shipment, Not the Acronym
Four practical questions narrow the choice quickly.
How will the goods actually move?
Determine whether the shipment is multimodal or requires a rule specifically designed for sea and inland waterway transport.
Who should arrange the international freight?
F rules generally leave the main carriage with the buyer, while C and D rules place that responsibility with the seller.
Where should the seller's risk end?
Decide whether delivery should occur at origin, when goods are handed to a carrier or vessel, or at a destination-side location.
Who can handle import clearance and unloading?
DAP, DPU and DDP all involve destination delivery, but they allocate unloading and import-clearance responsibilities differently.
Incoterms® 2010 vs 2020: What Changed?
The Incoterms® 2020 rules retained the same overall framework of 11 trade rules, but introduced several practical revisions to improve clarity, reflect modern transport practices and make buyer and seller responsibilities easier to identify.
DAT Became DPU
Delivered at Terminal (DAT) was renamed Delivered at Place Unloaded (DPU), making clear that the agreed delivery location does not need to be a terminal.
On-Board Bill of Lading Option
Under FCA, the parties may agree that the buyer will instruct the carrier to issue an on-board bill of lading to the seller after loading, addressing transactions where a bank requires an on-board transport document.
CIP and CIF Now Use Different Default Cover
CIF retains the lower default insurance cover under Institute Cargo Clauses (C) or similar clauses, while CIP requires the broader cover under Institute Cargo Clauses (A) or similar clauses, unless the parties agree otherwise.
Costs Are Easier to Find
Incoterms® 2020 gathers the cost responsibilities for each rule in articles A9/B9, giving buyers and sellers a clearer consolidated view of expected costs.
Security and Own Transport Are Addressed More Clearly
The 2020 edition makes transport-related security obligations more explicit and also recognises that, under certain rules, carriage may be arranged using the seller's or buyer's own means of transport.
Incoterms® 2020 remains the current ICC edition. A page updated in 2026 is still describing Incoterms® 2020; the year of a website update should not be presented as a new Incoterms edition.
Compare Common Incoterms Side by Side
Incoterms comparisons help buyers and sellers understand how similar-looking trade terms can create very different obligations. These guides compare freight arrangements, customs clearance, import duties, delivery points and risk transfer.
DAP vs DDP
Both DAP and DDP can deliver goods to a named place of destination. The key difference is who handles import clearance and who pays import duties and taxes.
More Incoterms Guides
Compare how EXW, FOB and DDP divide transport, delivery, customs and risk responsibilities between the buyer and seller.
Carrier Handover FCA vs FOBCompare delivery to a carrier under FCA with delivery on board a vessel under FOB, including why FCA is often considered for containerized cargo.
Freight & Customs DDP vs CIF vs FOBCompare main carriage, risk transfer, import clearance and duties across DDP, CIF and FOB shipping arrangements.
Legacy & Common Shipping Terms
Incoterms® FAQs
Quick answers to common questions about Incoterms® 2020, buyer and seller responsibilities, shipping costs, risk transfer and the use of trade terms in sales contracts.
What does Incoterms mean in shipping?
Incoterms® stands for International Commercial Terms. They are standardized trade rules published by the International Chamber of Commerce (ICC) that clarify important buyer and seller responsibilities for delivery, costs and risk in contracts for the sale of goods.
What are the 11 Incoterms® 2020 rules?
The seven rules for any mode or modes of transport are EXW, FCA, CPT, CIP, DAP, DPU and DDP. The four rules for sea and inland waterway transport are FAS, FOB, CFR and CIF.
There is no official group of “six major Incoterms.” The ICC publishes 11 Incoterms® 2020 rules, and the appropriate rule depends on the shipment arrangement.
You can review all eleven terms in the Incoterms® 2020 rules directory above.
Are Incoterms® 2020 still the current rules?
Yes. Incoterms® 2020 remains the current edition published by the ICC. It entered into force on January 1, 2020. A guide updated in 2026 is still explaining Incoterms® 2020 unless the ICC publishes a new official edition.
Do Incoterms determine ownership of the goods?
No. Incoterms® do not determine when title, property or ownership of the goods transfers from seller to buyer. They also do not replace the complete sales contract. Ownership, payment, remedies for breach and other contractual issues should be addressed separately in the sales agreement.
Which Incoterm should I use when shipping from China?
There is no single Incoterm that is appropriate for every shipment. The choice depends on the transport mode, delivery point, who should arrange the main carriage, where risk should transfer, and which party can handle export or import formalities.
For example, containerized cargo delivered to a carrier before loading on a vessel may make FCA more appropriate to consider than automatically using FOB.
Are shipping costs and risk transferred at the same point?
Not necessarily. Under CPT, CIP, CFR and CIF, the seller contracts and pays for carriage toward the named destination, but risk transfers to the buyer earlier at the delivery point defined by the selected rule.
This is why the freight-paying party should not be assumed to carry the risk for the entire transportation route.
Incoterms® rules should be incorporated precisely. A sales contract should identify the chosen rule, the named place, port or point, and the applicable Incoterms® edition.
Related Shipping Resources
After choosing an Incoterm, the next planning decisions include transport mode, route, service scope and destination handling. These resources cover the practical logistics involved in moving freight from China to international markets.
Shipping From China Guide
Understand shipping methods, freight costs, transit times, customs requirements and the logistics process for moving goods from China to international markets.
Sea Freight From China
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Air Freight From China
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DDP Shipping From China
See how DDP shipping from China can combine international freight, customs coordination, duty handling and final delivery within one logistics arrangement.
Door-to-Door Shipping From China
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Rail Freight From China
Compare China-Europe rail routes, transit times, freight costs, LCL options and customs requirements for shipments to Europe, Russia and Central Asia.