Incoterms are the 11 trade rules that say who pays for transport, insurance and customs, and where risk passes from seller to buyer. Pick a rule for a full guide with a cost and risk chart.
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Incoterms® are standard trade terms published by the International Chamber of Commerce (ICC). Written into a sales contract as three letters and a place, such as "FCA Shanghai Incoterms® 2020", they tell both sides who arranges and pays for each part of the journey, who handles export and import customs, and at which point the risk of loss or damage passes from the seller to the buyer.
The current edition is Incoterms® 2020, in force since 1 January 2020. There is no Incoterms 2025: the 2020 rules remain current until the ICC publishes a new edition, and a contract can still name an older edition such as 2010 if both parties agree.
| Rule | Name | Transport | Risk passes to the buyer | Main freight paid by |
|---|---|---|---|---|
| EXW | Ex Works | Any | At the seller's premises, not loaded | Buyer |
| FCA | Free Carrier | Any | Handed to the buyer's carrier | Buyer |
| FAS | Free Alongside Ship | Sea | Alongside the ship at the port of shipment | Buyer |
| FOB | Free On Board | Sea | On board at the port of shipment | Buyer |
| CFR | Cost and Freight | Sea | On board at the port of shipment | Seller |
| CIF | Cost, Insurance and Freight | Sea | On board at the port of shipment | Seller (plus insurance) |
| CPT | Carriage Paid To | Any | Handed to the first carrier | Seller |
| CIP | Carriage and Insurance Paid To | Any | Handed to the first carrier | Seller (plus insurance) |
| DAP | Delivered at Place | Any | At the named destination, ready for unloading | Seller |
| DPU | Delivered at Place Unloaded | Any | At the named destination, unloaded | Seller |
| DDP | Delivered Duty Paid | Any | At the named destination, import cleared | Seller (plus duties) |
To see every step side by side, or to get a recommendation from four questions, open the Incoterms chooser and comparison chart.
Four rules are for sea and inland waterway transport only: FAS, FOB, CFR and CIF. They suit bulk and break bulk cargo loaded straight onto a ship. For containers, the ICC recommends the "any mode" rules instead: FCA rather than FOB, and CPT or CIP rather than CFR or CIF, because a container is handed to the carrier at a terminal, often days before it is loaded.
Incoterms do not decide when ownership of the goods passes, the price or how it is paid, or what happens if the contract is breached. Those belong in the sales contract. They also do not fix the transport contract itself: the bill of lading or air waybill does that. Always write the rule with a precise named place and the edition, for example "DAP 12 Harbour Road, Felixstowe, UK, Incoterms® 2020".