Incoterms 2020
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Incoterms 2020 – your guide to the world of international trade standards

incoterms 2020

Buying and selling goods in the international trade system is often complicated by the need to determine the responsibilities, costs, and risks of each party.


To facilitate import and export trade, the International Chamber of Commerce (ICC) has introduced International Commercial Terms (Incoterms®), which play the role of mandatory global trade conditions for the sale of goods. Regardless of your role – placing purchase orders, packaging and marking shipments, or issuing certificates of origin – these standards have become part of your everyday trade vocabulary and serve as your guide.


The Incoterms® define a set of three-letter trade terms for the sale of goods worldwide. All these terms have very precise meanings.

Types of transportation
Any mode of transport Maritime and inland waterway transport
EXW FAS
FCA FOB
CPT CFR
CIP CIF
DAP
DPU
DDP

Group E

The term "E" imposes minimal obligations on the seller: they only need to deliver the goods at an agreed place, usually at the seller's premises.


EXW

(any mode of transport)

incoterms exw

"Ex Works" means that the seller fulfills their delivery obligation when they make the goods available to the buyer at their premises or another agreed place (e.g., factory, warehouse, etc.). The seller is not required to load the goods onto any transportation, and they are not obligated to carry out formalities for export, if applicable.

It is strongly recommended for the parties to clearly define the point in the named place of delivery and specify that, up to that point, costs and risks are borne by the seller. The buyer bears all costs and risks associated with accepting the goods at the agreed point (if specified) in the named place of delivery.


EXW places minimal obligations on the seller. This term should be used with caution because:

  1. The seller has no obligation to load the goods for the buyer, even though the seller is, in fact, in a better position to do so. If the seller does load the goods, they do so at the buyer's risk and expense. In cases where the seller is in a better position regarding loading the goods, it is usually advisable to use the FCA term (Free Carrier), which obliges the seller to load at their risk and expense.
  2. The buyer purchasing goods from the seller for export under EXW terms should consider that the seller is only obligated to provide assistance that may be necessary for this purpose. The seller is not obliged to arrange for the completion of customs formalities for export (export customs clearance). Therefore, it is not recommended for the buyer to use the EXW term if they cannot directly or indirectly ensure the completion of customs formalities for export.
  3. The buyer has limited obligations to provide the seller with any information related to the export of goods. However, the seller may need such information, for example, for tax purposes or for business reporting.

Group F

Terms starting with "F" stipulate that the seller must arrange for the delivery of the goods for transportation according to the buyer's instructions.


FCA

(any mode of transport)

incoterms fca

"Free Carrier" means that the seller delivers the goods to the carrier or another person nominated by the buyer at their premises or another agreed location.


It is strongly recommended for the parties to clearly define the point in the named place of delivery, as the risk transfers to the buyer at this point.


When the parties intend to transfer the goods at the seller's premises, they must specify the address of this location in the agreed place of delivery. On the other hand, if the parties believe that the goods should be delivered at another location, they should identify this specific transfer point.


Under FCA, the seller is required to complete export formalities, if applicable. However, the seller is not obliged to carry out import customs formalities, pay import duties, or perform other import customs formalities.


FAS

(maritime and inland waterway transport)

incoterms fas

"Free Alongside Ship" means that the seller is considered to have fulfilled their delivery obligation when the goods are placed alongside the ship nominated by the buyer (i.e., at the dock or on a barge) at the agreed port of shipment. The risk of loss or damage to the goods transfers when the goods are alongside the ship, and from this moment, the buyer bears all costs.


It is recommended for the parties to most accurately define the loading point in the named port of shipment, as costs and risks up to this point are borne by the seller, and handling-related costs and charges may vary according to port practices.


The seller is obligated to deliver the goods either by placing them alongside the ship or by providing the arranged goods for loading. The reference to the obligation of "providing" takes into account numerous chain sales, which are frequently applied in commodity trading.


When placing goods in containers, it is customary for the seller to deliver the goods to the carrier at the terminal rather than placing them alongside the ship. In such situations, using the term FAS is inappropriate, and the term FCA should be used instead.


FAS requires the seller to complete export formalities, if applicable. However, the seller is not obliged to carry out import customs formalities, pay import duties, or perform other import customs formalities.


FOB

(maritime and inland waterway transport)

incoterms fob

"Free on Board" means that the seller delivers the goods on board the ship nominated by the buyer at the named port of shipment or provides the arranged goods in this manner. The risk of loss or damage to the goods transfers when the goods are on board the ship, and from this moment, the buyer bears all costs.

The seller is obligated to either place the goods on board the ship or provide the arranged goods for loading. The reference to the obligation of "providing" takes into account numerous chain sales, which are frequently applied in commodity trading.


FOB may be inappropriate when the goods are handed over to the carrier before being placed on board the ship, for example, goods in containers typical for delivery to the terminal. In such situations, using the term FCA is advisable.


FOB requires the seller to complete export formalities, if applicable. However, the seller is not obliged to carry out import customs formalities, pay import duties, or perform other import customs formalities.


Group C

Terms starting with "C" stipulate that the seller must conclude a carriage contract on ordinary terms at their own expense.


CFR

(maritime and inland waterway transport)

incoterms cfr

"Cost and Freight" means that the seller delivers the goods on board the ship or provides the arranged goods in this manner. The risk of loss or damage to the goods transfers when the goods are on board the ship. The seller is obligated to conclude a contract and pay all costs and freight necessary for delivering the goods to the named destination port.


When using the terms CFR, CIP, CPT, or CIF, the seller fulfills their delivery obligation when they transfer the goods to the carrier, not when the goods reach the destination.


This term includes two critical points since the risk and costs transfer at two different locations. While the destination port is always specified in the contract, the loading port may not be indicated when the risk transfers to the buyer. If the loading port is of particular interest to the buyer, it is recommended for the parties to most clearly define it in the contract.


The parties are also advised, if possible, to more accurately determine the point in the agreed destination port, as costs up to this point are borne by the seller. The seller is recommended to ensure contracts of carriage that accurately reflect such a choice. If the seller, under such a carriage contract, incurs costs for unloading at the agreed point in the destination port, the seller has no right to demand reimbursement of such costs from the buyer unless otherwise agreed by the parties.


The seller is obligated to either place the goods on board the ship or provide the arranged goods at the destination. Additionally, the seller is obligated to either conclude a carriage contract or ensure such a contract. The reference to the obligation of "providing" takes into account numerous chain sales, which are frequently applied in commodity trading.


CFR may be inappropriate when the goods are handed over to the carrier before being placed on board the ship, for example, goods in containers typical for delivery to the terminal. In such situations, using the term CPT is advisable. CFR requires the seller to complete export formalities, if applicable. However, the seller is not obliged to carry out import customs formalities, pay import duties, or perform other import customs formalities.


CIF

(maritime and inland waterway transport)

incoterms cif

"Cost, Insurance and Freight" means that the Seller delivers the goods on board the ship or provides the arranged goods at the destination. The risk of loss or damage to the goods transfers when the goods are on board the ship. The Seller is obligated to conclude a contract and pay all costs and freight necessary for delivering the goods to the named destination port.


The Seller is also obligated to conclude an insurance contract covering the risk of loss or damage to the goods during transportation. The Buyer should note that according to CIF, the Seller is obliged to provide insurance only with minimal coverage. If the Buyer wishes to have more protection through insurance, they need to either clearly agree on this with the Seller or arrange additional insurance at their own expense.


When using the terms CFR, CIP, CFR, or CIF, the Seller fulfills their delivery obligation when they transfer the goods to the carrier in a specific chosen manner but not when the goods reach the destination.


This term includes two critical points since the risk and costs transfer at two different locations. While the destination port is always specified in the contract, the loading port may not be indicated when the risk transfers to the buyer. If the loading port is of particular interest to the buyer, it is recommended for the parties to most clearly define it in the contract.


The parties are also advised, if possible, to more accurately determine the point in the agreed destination port, as costs up to this point are borne by the seller. The seller is recommended to ensure contracts of carriage that accurately reflect such a choice. If the seller, under such a carriage contract, incurs costs for unloading at the agreed point in the destination port, the seller has no right to demand reimbursement of such costs from the buyer unless otherwise agreed by the parties.


The Seller is obligated to either place the goods on board the ship or provide the arranged goods at the destination. Additionally, the seller is obligated to either conclude a carriage contract or ensure such a contract. The reference to the obligation of "providing" takes into account numerous chain sales, which are frequently applied in commodity trading.


CIF may be inappropriate when the goods are handed over to the carrier before being placed on board the ship, for example, goods in containers typical for delivery to the terminal. In such situations, using the term CIP is advisable. CIF requires the seller to complete export formalities, if applicable. However, the seller is not obliged to carry out import customs formalities, pay import duties, or perform other import customs formalities.


CPT

(any mode of transport)

incoterms cpt

"Carriage Paid To" means that the Seller hands over the goods to the carrier or another person nominated by the Seller at the agreed place (if such a place is agreed upon by the parties) and that the Seller is obligated to conclude a carriage contract and bear the transportation costs necessary for delivering the goods to the agreed destination.


This term can be used regardless of the chosen mode of transport and when using more than one mode of transport.


This term includes two critical points since the risk and costs transfer at two different locations. It is recommended for the parties, if possible, to most clearly define in the contract the place of delivery of the goods where the risk transfers to the buyer and the specified destination where the seller is obligated to conclude a carriage contract.


When using multiple carriers for transporting goods in an agreed direction and if the parties have not agreed on a specific delivery point. The drawback is that the risk transfers when delivering the goods to the first carrier at a point chosen entirely by the seller and beyond the buyer's control. If the parties intend for the risk to transfer at a later stage (such as in an ocean port or airport), they need to specify this in their sales contract.


The parties are also advised, if possible, to more accurately determine the point in the agreed destination, as costs up to this point are borne by the seller. The seller is recommended to ensure contracts of carriage that accurately reflect such a choice. If the seller, under such a carriage contract, incurs costs for unloading at the agreed point in the destination, the seller has no right to demand reimbursement of such costs from the buyer unless otherwise agreed by the parties.


CPT requires the seller to complete export formalities, if applicable. However, the seller is not obliged to carry out import customs formalities, pay import duties, or perform other import customs formalities upon import.


CIP

(any mode of transport)

incoterms cip

"Carriage and Insurance Paid To" means that the Seller hands over the goods to the carrier or another person nominated by the Seller at the agreed place (if such a place is agreed upon by the parties) and that the Seller is obligated to conclude a carriage contract and bear the transportation costs necessary for delivering the goods to the agreed destination.


The Seller is also obligated to conclude an insurance contract covering the risk of loss or damage to the goods during transportation. The Buyer should note that under CIP, the Seller is required to provide insurance only with minimum coverage. If the Buyer wishes to have additional protection through insurance, the Buyer needs to either clearly agree on this with the Seller or obtain additional insurance at their own expense.


When using the terms CPT, CIP, CFR, or CIF, the Seller fulfills their obligation of delivery when they hand over the goods to the carrier, not when the goods reach the destination.

This term includes two critical points since the risk and costs transfer at two different locations. It is recommended for the parties, if possible, to most clearly define in the contract the place of delivery of the goods where the risk transfers to the buyer and the specified destination where the seller is obligated to conclude a carriage contract.


When using multiple carriers for transporting goods in an agreed direction and if the parties have not agreed on a specific delivery point, the drawback is that the risk transfers when delivering the goods to the first carrier at a point chosen entirely by the seller and beyond the buyer's control. If the parties intend for the risk to transfer at a later stage (such as in an ocean port or airport), they need to specify this in their sales contract.


The parties are also advised, if possible, to more accurately determine the point in the agreed destination, as costs up to this point are borne by the seller. The seller is recommended to ensure contracts of carriage that accurately reflect such a choice. If the seller, under such a carriage contract, incurs costs for unloading at the agreed point in the destination, the seller has no right to demand reimbursement of such costs from the buyer unless otherwise agreed by the parties.


CIP requires the seller to complete export formalities, if applicable. However, the seller is not obliged to carry out import customs formalities, pay import duties, or perform other import customs formalities upon import.


Group D

The "D" terms differ in nature from the "C" terms because under "D," the seller is responsible for the arrival of the goods at an agreed place or destination point at the border or inside the importing country. The seller is obligated to bear all risks and costs related to delivering the goods to this place (point). Thus, "D" terms indicate arrival contracts, while "C" terms denote departure (shipment) contracts.


DAP

(any mode of transport)

incoterms dap

"Delivered at Place" means that the seller delivers the goods when they are placed at the disposal of the buyer on the arriving means of transport, ready for unloading, at the agreed destination. The seller bears all risks associated with delivering the goods to the specified place.


It is recommended for the parties to most accurately define the point at the agreed destination since the risks up to this point are borne by the seller. The seller is recommended to ensure contracts of carriage that accurately reflect such a choice. If, under the seller's carriage contract, the seller incurs costs for unloading at the agreed destination, the seller has no right to demand reimbursement of such costs from the buyer unless otherwise agreed by the parties.


DAP requires the seller to complete export formalities, if applicable. However, the seller is not obliged to carry out import customs formalities, pay import duties, or perform other import customs formalities upon import. If the parties intend to place on the seller the execution of import customs formalities, payment of any import duties, and the performance of other import customs formalities, it is advisable to use the term DDP.


This delivery condition has been in use since January 1, 2011, replacing DAF, DES, and DDU.


DPU

(any mode of transport)

incoterms dpu

"Delivered at Place Unloaded" – delivery to the place of unloading. The seller considers that they have fulfilled their delivery obligations when the goods, released for export customs clearance, are unloaded from the arriving transport and handed over to the buyer at the specified destination. The transfer of risks occurs after unloading at the specified terminal location. Cost distribution is at the destination.


The seller's responsibility zone includes: security control; checking quality, quantity, weight, size; packaging, marking of the goods; performing export customs formalities; delivering the goods to the agreed terminal; performing transit customs formalities; unloading the goods.


The seller is obliged to provide the buyer with any document (e.g., a copy of the transport document confirming export and the date of shipment) necessary for obtaining the goods, at their expense. The buyer's responsibility zone includes performing import customs formalities and necessary actions after unloading the goods.


The term DPU is advisable to use in cases involving various modes of transport. The replacement of the DAT term with DPU was made to provide more flexibility in determining the place of delivery of the goods. Now the seller and the buyer can agree on any place for the delivery of the goods without being limited to a specific terminal. It is recommended to clearly specify the place of delivery of the goods in the contract since the seller bears the risks up to this point.


DDP

(any mode of transport)

incoterms ddp

"Delivered Duty Paid" – delivery means that the seller delivers the goods when the buyer is provided with the goods, cleared of duties necessary for import, on the arriving means of transport, ready for unloading at the designated destination. The seller bears all costs and risks associated with delivering the goods to the destination and is obliged to perform customs formalities necessary not only for export but also for import, pay any charges levied on export and import, and perform all customs formalities.

DDP imposes maximum obligations on the seller.


It is recommended for the parties to most accurately define the point at the agreed destination since the costs and risks up to this point are borne by the seller. The seller is recommended to ensure contracts of carriage that accurately reflect such a choice. If, under the seller's carriage contract, the seller incurs costs for unloading at the agreed destination, the seller has no right to demand reimbursement of such costs from the buyer unless otherwise agreed by the parties. It is not recommended to use DDP if the seller is directly or indirectly unable to ensure the execution of customs formalities for import (import clearance).


If the parties wish to transfer all risks and costs related to the execution of customs formalities for import to the buyer, it is advisable to use the term DAP.


Any VAT or other taxes payable upon import are borne by the seller unless otherwise agreed explicitly in the sales contract.


  • Calculation of volume of goods to be loaded into a container depending on specifications
  • Choosing loading and packing method
  • Preparation of necessary documents for international business transactions
  • Preparation and selection of a container for shipment
  • Cargo insurance and survey
  • We will help to obtain insurance for scheduled shipments and lots, as well as for a separate shipment.
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  • We offer special terms and conditions on a case-by-case basis.
  • You select a list of risks to be included into insurance programme.
  • licence for goods;
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  • Analysis of options and selection of rolling stock/road vehicles
  • Selection of optimum route
  • Choosing an optimum price
  • Control of cargo movement from the warehouse to the port
  • Handling unanticipated situations
  • Container forwarding in port
  • Customs handling
  • Consolidation of the lot per bill of lading
  • Preparation of documents per lot for the buyer
  • Analysis of liner services on the required route (time/cost/service)
  • Selection of the best container line on the given route
  • Booking places on the planned vessel
  • Tracking container movement before unloading at the port of destination
  • Control of arrival of the container lot to the port of destination
  • Container forwarding in port
  • Customs handling
  • Planning delivery of containers to the warehouse with the consignee
  • Analysis of options and selection of rolling stock/road vehicles
  • Selection of optimum route
  • Choosing an optimum price
  • Control of cargo movement from the port to the warehouse
  • Handling unanticipated situations
  • Control of unloading of goods
  • Completion of shipment documents
  • Delivery of the empty container to the shipping line's warehouse
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