Incoterms 2020 Guide

Incoterms (International Commercial Terms) are standardized trade terms published by the International Chamber of Commerce (ICC). They define who is responsible for shipping, insurance, and customs between buyer and seller. The current version is Incoterms 2020.

Under FOB (Free On Board), the seller delivers goods onto the vessel at the origin port — risk transfers to the buyer at that point. Under CIF (Cost, Insurance, Freight), the seller also pays for freight and insurance to the destination port, but risk still transfers when goods are loaded at origin.

DDP (Delivered Duty Paid) gives buyers the least responsibility — the seller handles everything including customs and delivery. However, buyers lose control over shipping costs and routing. FOB is popular because it gives buyers control over the main freight leg.

Yes, but some terms are sea-only (FAS, FOB, CFR, CIF). For air or multimodal transport, use FCA, CPT, CIP, DAP, DPU, or DDP instead. Using sea-only terms for air freight is a common and costly mistake.

No. Incoterms only cover delivery, risk, and cost allocation. Payment terms (T/T, L/C, D/P etc.) are agreed separately in the sales contract.