Incoterms Decision Intelligence
Understand Incoterms. Choose with confidence.
Every Incoterms 2020 rule explained for real procurement decisions — who pays, who bears risk, and which rule fits your shipment. Built by TradeIntel as decision support, not legalese.
Where should you start?
Maximum buyer control
You run the freight, the insurance and the schedule. EXW hands you everything; FCA keeps that control while the seller clears export — usually the smarter cross-border version.
Maximum seller responsibility
The seller carries the journey to your door. DAP leaves import clearance with you; DDP puts even duties and taxes on the seller — if the seller can genuinely act as importer.
Container shipping
Containers change hands at terminal gates, not ship's rails. Any-mode rules — FCA for buyer-arranged freight, CIP for seller-arranged with all-risks insurance — usually match that reality best.
Bulk & conventional sea freight
For cargo loaded directly aboard — grain, steel, project cargo — the sea-only classics still fit: FOB for buyer-controlled freight, CFR and CIF when the seller books the voyage.
All 11 Incoterms 2020 rules
Any transport mode
- EXW — Ex Works: Minimum seller obligation — the buyer runs the entire journey from the seller's door.
- FCA — Free Carrier: The modern workhorse — seller clears export and hands over to the buyer's carrier at a named point.
- CPT — Carriage Paid To: Any-mode freight-paid rule — seller pays carriage to destination, risk leaves at the first carrier.
- CIP — Carriage and Insurance Paid To: Freight plus all-risks insurance from the seller — the strongest default cover in the rulebook.
- DAP — Delivered at Place: Seller delivers to the named destination, ready for unloading — buyer clears import and unloads.
- DPU — Delivered at Place Unloaded: The only rule where the seller unloads — delivery completes with the goods on the ground.
- DDP — Delivered Duty Paid: Maximum seller obligation — delivered, import-cleared and duty-paid to the buyer's door.
Sea and inland waterway only
- FAS — Free Alongside Ship: Bulk-cargo specialist — seller delivers alongside the vessel; the buyer takes it from the quay.
- FOB — Free On Board: The classic sea rule — risk passes when the goods are on board; the buyer runs the voyage.
- CFR — Cost and Freight: Seller pays the sea freight — but the buyer carries the voyage risk from loading.
- CIF — Cost, Insurance and Freight: The commodity classic — freight and minimum insurance arranged by the seller, risk with the buyer from loading.
The responsibility spectrum
The eleven rules form a spectrum from buyer-heavy to seller-heavy obligations. Positions are educational — they illustrate relative responsibility, not a mathematical score. Delivery points, clearance duties and insurance obligations still differ rule by rule.
Buyer carries most obligations → seller carries most obligations:
Cost transfer and risk transfer are not the same line
Every Incoterms rule draws two lines through the journey: one for costs (who pays for each stage) and one for risk (who absorbs loss or damage at each moment). In the C-family rules — CFR, CIF, CPT and CIP — those lines split by design: the seller pays freight to the named destination, but risk passes to the buyer back at origin, at loading or first-carrier handover. Damage mid-voyage under CIF is the buyer's insurance claim, not the seller's problem.
Just as important is what no Incoterms rule decides. Incoterms do not determine who owns the goods — title transfer lives in your contract. They do not replace a sales contract, set the price, or fix payment terms. They allocate delivery tasks, costs and risk — nothing more, and nothing less.
See the full cost-and-risk map across all 11 rules in Incoterms costs and risks.
Compare the rules people actually confuse
- FOB vs CIF: FOB and CIF transfer risk at the same point — loading. What differs is freight control and insurance. Compare them side by side and pick by capability, not habit.
- EXW vs FCA: EXW leaves export paperwork and loading risk with the buyer; FCA fixes both. See the side-by-side differences and when each rule genuinely makes sense.
- CIF vs CIP: CIF and CIP look alike but insure very differently — minimum ICC (C) vs all-risks ICC (A). Compare risk points, transport modes and when each rule fits.
- DAP vs DDP: DAP and DDP deliver to the same place — the difference is who imports. Compare duty, VAT and clearance responsibility, and match the rule to real customs capability.
- FCA vs FOB: FOB keeps seller risk alive until vessel loading; FCA transfers it at the terminal gate. See why container shippers lean FCA, where FOB still fits, and how to decide.
Decision guides
- What are Incoterms? A practical guide to the 2020 rules
- Incoterms for container shipping: choosing rules that match the box
- Incoterms costs and risks: who pays, who bears, and why they differ
- The best Incoterm for importers: matching the rule to your capability
- The best Incoterm for exporters: service, risk and what you can price
Stop guessing. Get a shortlist.
The TradeIntel Incoterms Assessment turns your shipment profile — mode, cargo, capability, risk appetite — into a reasoned Incoterm shortlist in a few minutes. Educational decision support, with the 'why' spelled out.
Frequently asked questions
What are Incoterms in simple terms?
Incoterms are eleven standardised three-letter trade rules (published by the ICC, currently the 2020 edition) that define who arranges and pays for transport, where risk passes from seller to buyer, and who handles export and import clearance. They plug into a sales contract so both sides work from the same script.
How many Incoterms are there?
Eleven in the 2020 edition. Seven work for any transport mode (EXW, FCA, CPT, CIP, DAP, DPU, DDP) and four are for sea and inland waterway only (FAS, FOB, CFR, CIF).
Which Incoterms are best for container shipping?
Usually the any-mode rules whose risk points match the terminal handover: FCA when the buyer arranges freight, CIP when the seller does. FOB and CIF put the risk point on board the vessel, which containers reach days after leaving the seller's control — workable, but worth choosing knowingly.
Do Incoterms decide who owns the goods?
No. Incoterms allocate delivery tasks, costs and risk — they never transfer title, set payment terms, or replace a sales contract. Ownership and payment live in separate contract clauses that you write alongside the chosen rule.
What is the difference between cost transfer and risk transfer?
Cost transfer decides who pays for each stage; risk transfer decides who absorbs loss or damage at each moment. They are not always the same point — in CFR, CIF, CPT and CIP the seller pays transport to destination while risk passes to the buyer at origin.
Which Incoterm should I use?
It depends on your freight capability, insurance programme, customs access on each side of the border, and how much control you want. The TradeIntel Incoterms Assessment asks eight questions about your shipment and explains a shortlist — a faster route than reading all eleven rules cold.
Reviewed for practical procurement and logistics relevance by TradeIntel.
TradeIntel provides educational decision support and does not provide legal, tax, customs or contractual advice. Incoterms should be incorporated into a complete sales contract with a precisely named place or port.