Import–Export & Logistics KnowledgePosted on 22/07/2026
Incoterms® 2020 is the set of rules published by the International Chamber of Commerce (ICC), in force since 1 January 2020. Its eleven rules answer three questions: who arranges what, who pays which cost, and at which point risk passes from seller to buyer.
One thing to be clear on first: Incoterms is not the sales contract. The rules do not govern price, payment terms, when title to the goods transfers, or remedies for breach. Those still belong in the contract itself.
Eleven rules in two families
The first family works for any mode of transport, including multimodal moves and containerised cargo:
- EXW — Ex Works: the seller simply makes the goods available at its premises; the buyer handles everything else
- FCA — Free Carrier, delivered to the carrier the buyer nominates
- CPT and CIP — Carriage paid to destination; under CIP the seller must also buy insurance
- DAP — Delivered at Place, goods still on the arriving vehicle
- DPU — Delivered at Place Unloaded
- DDP — Delivered Duty Paid
The second family is for sea and inland waterway transport only: FAS (alongside ship), FOB (on board), CFR (cost and freight), CIF (cost, insurance and freight).
What changed from the 2010 edition
- DAT became DPU. The old name was tied to a “terminal”; the new one allows delivery and unloading at any named place.
- CIP insurance was raised. The seller must now cover Institute Cargo Clauses (A) — all-risks level. CIF keeps the ICC (C) minimum.
- FCA gained an on-board bill of lading option. The parties may agree that the carrier issues the seller a shipped-on-board bill — removing the exact obstacle that made sellers avoid FCA under letters of credit.
- Costs are consolidated. Every cost allocation now sits in article A9/B9 of each rule rather than being scattered as in 2010.
- Own means of transport are recognised. FCA, DAP, DPU and DDP now allow for the obligated party carrying the goods on its own vehicles instead of engaging a carrier.
Three mistakes we see in practice
Using FOB for containerised cargo. FOB puts the risk transfer at the moment the goods are loaded on board, but containers are in reality handed over at the CY or CFS days earlier. In that gap the seller carries documentary risk on cargo it no longer controls. FCA is the correct rule for containers.
Accepting DDP without pricing in destination taxes. DDP obliges the seller to clear the goods for import and pay every tax due in the destination country, VAT included. Many countries only refund VAT to entities registered for tax locally — a foreign seller usually cannot recover it.
Naming a rule without a place and an edition. “CIF Rotterdam” is incomplete. The full form is “CIF Rotterdam Incoterms® 2020”; leave out the year and any dispute starts with an argument over whether the 2020 or 2010 edition applies.
Choosing the right rule for your shipment
No rule is inherently “best” — only better matched to what each side can actually handle. New exporters not yet comfortable booking carriage should start with FCA or FOB. Sellers who want control of the whole chain, and margin on the freight leg, go with CIF, CIP or DAP.
ORBIS SHIPPING advises on the rule to use shipment by shipment — based on commodity, lane, payment method and how much each party wants to control — then prepares a document set that matches the rule chosen.
Incoterms® is a registered trademark of the International Chamber of Commerce. This article is ORBIS SHIPPING's own commentary; the complete official rules are published by the ICC at iccwbo.org.