INCOTERMS 2020

Incoterms® (International Commercial Terms) are a set of standardized trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities and obligations of buyers and sellers in international trade transactions. Incoterms® are widely used to establish clear terms of delivery, determine the allocation of costs and risks, and specify the point at which the responsibility for goods transfers from the seller to the buyer.

7/3/20232 min read

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Incoterms® 2020, the latest version as of my knowledge cutoff in September 2021, consists of 11 different terms, each represented by a three-letter code. These terms include:

  1. EXW (Ex Works): The seller makes the goods available at their premises, and the buyer is responsible for all subsequent transportation and costs.

  3. FCA (Free Carrier): The seller delivers the goods to a carrier or a nominated person at a specified location. The buyer assumes responsibility once the goods are in the carrier's possession.

  5. CPT (Carriage Paid To): The seller delivers the goods to a carrier or a nominated person and pays for transportation to the designated destination.

  7. CIP (Carriage and Insurance Paid To): Similar to CPT, but the seller also arranges and pays for insurance against the buyer's risk of loss or damage during transportation.

  9. DAT (Delivered at Terminal): The seller delivers the goods, unloaded, at a specified terminal at the named port or place of destination. The seller is responsible for the cost of transportation to that terminal.

  11. DAP (Delivered at Place): The seller delivers the goods, ready for unloading, at the named place of destination. The seller is responsible for the cost of transportation to that place.

  13. DDP (Delivered Duty Paid): The seller is responsible for delivering the goods to the named place in the buyer's country, covering all costs and bearing any risks until the goods have been cleared for import and delivered.

  14. FAS (Free Alongside Ship): The seller places the goods alongside the vessel at the named port of shipment. The buyer is responsible for loading the goods onto the vessel and for all subsequent transportation.

  16. FOB (Free on Board): The seller is responsible for delivering the goods onto the vessel at the named port of shipment. The buyer assumes responsibility for the goods and costs once they are on board the vessel.

  18. CFR (Cost and Freight): The seller is responsible for delivering the goods onto the vessel at the named port of shipment and pays for the cost of transportation to the named port of destination.

  20. CIF (Cost, Insurance, and Freight): Similar to CFR, but the seller also arranges and pays for insurance against the buyer's risk of loss or damage during transportation.

It's important to study and understand the specific details and implications of each Incoterm® to determine the most suitable one for your international trade transactions. Consider consulting with legal or trade professionals to ensure the accurate application of Incoterms® in your business activities.