Incoterms explained & compared
The 11 Incoterms 2020 rules decide who pays freight, who clears customs, and where risk passes between seller and buyer — and each choice moves your landed cost.
What are Incoterms?
Incoterms — short for International Commercial Terms — are the standard three-letter rules published by the International Chamber of Commerce (ICC) that define, for any international sale, who arranges and pays for transport, who handles export and import clearance, who insures the goods, and the exact point where risk transfers from seller to buyer. The current set is Incoterms 2020.
Getting the term right is the difference between a clean landed-cost estimate and a nasty surprise at the border. See the full Incoterms definition in the glossary, then use the table below to compare all 11.
Who pays, and who carries the risk
The green bar shows how far the seller's costs run along the journey. The marker shows where riskpasses to the buyer. For the C-rules they're not the same point — the seller keeps paying freight after your risk has already started.
The 11 Incoterms 2020
| Code | Name | Export clearance | Import clearance | Best for |
|---|---|---|---|---|
| EXW | Ex Works | Buyer | Buyer | Buyers with their own forwarder who want maximum control from the factory gate |
| FCA | Free Carrier | Seller | Buyer | Containerised or multimodal cargo where the seller handles export clearance |
| FAS | Free Alongside Ship | Seller | Buyer | Bulk or break-bulk cargo loaded alongside the ship (grain, ore, project cargo) |
| FOB | Free On Board | Seller | Buyer | Traditional sea freight where the buyer arranges and controls the main carriage |
| CFR | Cost and Freight | Seller | Buyer | Sea freight where the buyer wants the seller to book carriage but will insure separately |
| CIF | Cost, Insurance and Freight | Seller | Buyer | Sea freight where the buyer wants a single quote covering goods, freight and basic insurance |
| CPT | Carriage Paid To | Seller | Buyer | Containerised or multimodal cargo where the seller pays carriage but the buyer insures |
| CIP | Carriage and Insurance Paid To | Seller | Buyer | Multimodal cargo where the buyer wants carriage plus all-risks insurance bundled in |
| DAP | Delivered At Place | Seller | Buyer | Delivered-to-door sales where the buyer clears import and pays duty and VAT |
| DPU | Delivered At Place Unloaded | Seller | Buyer | Deliveries where the seller can safely unload — the only rule requiring seller unloading |
| DDP | Delivered Duty Paid | Seller | Seller | Landed-price sales where the buyer wants zero customs work — seller pays duty and import VAT |
Based on the Incoterms 2020 rules (ICC). Under every term except DDP, the buyer is importer of record and pays duty and import VAT — paid at the border by default, unless postponed via PVA.
Head-to-head comparisons
The pairings importers weigh up most — who pays freight, where risk sits, and what each does to your landed cost.
Know what your Incoterm does to your cost per unit.
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