What are Incoterms 2020?

Incoterms® 2020 are international trade terms published by the ICC (International Chamber of Commerce) that define who — seller or buyer — bears which costs and risks in the transport of goods. There are 11 Incoterms: EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAP, DPU, and DDP.

What does EXW (Ex Works) mean?

EXW means the seller only makes goods available at their premises. The buyer bears all further costs and risks — including export customs clearance. EXW places the minimum obligation on the seller.

What is the difference between FOB and FCA?

FOB (Free On Board) is only for sea transport — risk transfers when goods are on board the vessel. FCA (Free Carrier) works for all modes — risk transfers at handover to the first carrier. For containerized cargo, FCA is recommended because with FOB the container is often already in the terminal when the B/L is issued.

What is the difference between CIF and CIP?

CIF (sea only) requires the seller to arrange minimum ICC C insurance (approx. 110% of cargo value). CIP (all modes) under Incoterms 2020 requires comprehensive ICC A (All Risks) coverage — significantly better protection for the buyer.

When does risk transfer under CFR?

Under CFR (Cost and Freight) risk transfers on board at the port of shipment — even though the seller pays ocean freight to the destination port. This is the most common misunderstanding: the seller pays the freight, but the buyer bears the risk from loading.

What does DDP mean and what are its risks for the exporter?

DDP (Delivered Duty Paid) requires the seller to bear all costs to destination — including import duties, taxes, and charges in the buyer's country. Risks: the seller may need VAT registration in the destination country and bears full risk until delivery.

Which Incoterms are suitable for air freight?

FCA, CPT, and CIP are suitable for air freight. FAS, FOB, CFR, and CIF are exclusively for sea and inland waterway transport and must not be used for air freight.

Who must arrange insurance under FOB?

Under FOB no party is contractually obligated to arrange insurance. Since the buyer bears risk from on board, it is strongly recommended that the buyer arranges cargo insurance. Without insurance, the buyer bears the full loss risk at sea.

What is DPU and how does it differ from DAP?

DPU (Delivered at Place Unloaded) is the only Incoterm where the seller also arranges unloading at destination. Under DAP (Delivered at Place) unloading is the buyer's responsibility. DPU is especially suitable when the destination is a terminal or warehouse.

Do Incoterms define transfer of ownership?

No. Incoterms exclusively define cost and risk transfer, not the transfer of title/ownership. Transfer of ownership must be agreed separately in the sales contract.

What changed in Incoterms 2020 vs 2010?

Key changes: 1) DAT was renamed to DPU (and extended beyond terminals). 2) CIP now requires ICC A insurance (previously ICC C). 3) FCA now allows the buyer to instruct their bank to present an On Board B/L. 4) DAP, DPU, DDP may now be performed with the seller's own transport.

Can I still use Incoterms 2010?

Yes, contracting parties are free to choose which version to use. However, it is recommended to explicitly state the version in the contract (e.g., "FOB Hamburg Incoterms® 2020").

Incoterms 2020 Simulator – Free Risk & Cost Analysis Tool

Incoterms 2020 Simulator – Free Risk & Cost Analysis Tool | Frachtportal