Key points
- Risk passes at the delivery point, and under every C-term that point is at origin, not at destination.
- Only CIF and CIP oblige the seller to insure: ICC (C) for CIF, ICC (A) for CIP, both at 110% of contract value.
- FOB, CFR, CIF and FAS are sea-only; never use them for truck or rail freight.
- For containers, ICC recommends FCA, CPT and CIP over FOB, CFR and CIF.
- Always write the rule, a precise named place and the words Incoterms 2020.
What Incoterms decide, and what they leave out
An Incoterm is a three-letter shorthand inside your sales contract. It settles six questions: where the seller delivers, when the risk of loss or damage moves to the buyer, who pays which costs, who handles export and import clearance, which documents each side must supply, and whether anyone has to buy insurance. It does not settle the price, the payment method, when ownership passes or what happens if someone breaks the contract. Those need their own clauses, and mixing them up is one of the most common sources of disputes with suppliers.
The 11 rules at a glance
| Rule | Full name | Risk passes to buyer | Main carriage paid by | Export clearance | Import duty and VAT |
|---|---|---|---|---|---|
| EXW | Ex Works | At the seller's premises, goods not loaded | Buyer | Buyer | Buyer |
| FCA | Free Carrier | Loaded on the buyer's vehicle at the seller's premises, or ready for unloading at another named place | Buyer | Seller | Buyer |
| CPT | Carriage Paid To | On handover to the first carrier at origin | Seller | Seller | Buyer |
| CIP | Carriage and Insurance Paid To | On handover to the first carrier at origin | Seller | Seller | Buyer |
| DAP | Delivered at Place | At the named destination, ready for unloading | Seller | Seller | Buyer |
| DPU | Delivered at Place Unloaded | At the named destination, once unloaded | Seller | Seller | Buyer |
| DDP | Delivered Duty Paid | At the named destination, cleared for import, ready for unloading | Seller | Seller | Seller |
| FAS | Free Alongside Ship | Alongside the vessel at the port of loading | Buyer | Seller | Buyer |
| FOB | Free On Board | On board the vessel at the port of loading | Buyer | Seller | Buyer |
| CFR | Cost and Freight | On board the vessel at the port of loading | Seller | Seller | Buyer |
| CIF | Cost, Insurance and Freight | On board the vessel at the port of loading | Seller | Seller | Buyer |
Tap a card to flip it
Who pays what: the cost split
| Cost (S = seller, B = buyer) | EXW | FCA | FOB | CFR / CIF | CPT / CIP | DAP | DPU | DDP |
|---|---|---|---|---|---|---|---|---|
| Export packing and marking | S | S | S | S | S | S | S | S |
| Loading at seller's premises | B | S if delivered there | S | S | S | S | S | S |
| Export clearance | B | S | S | S | S | S | S | S |
| Origin terminal handling and loading on board | B | B | S | S | S | S | S | S |
| Main carriage | B | B | B | S | S | S | S | S |
| Cargo insurance | B (optional) | B (optional) | B (optional) | CFR: B (optional); CIF: S, ICC (C) | CPT: B (optional); CIP: S, ICC (A) | S (own risk) | S (own risk) | S (own risk) |
| Destination terminal and port unloading | B | B | B | B unless in seller's freight contract | B unless in seller's freight contract | S to arrival | S | S to arrival |
| Import clearance, duty and VAT | B | B | B | B | B | B | B | S |
| Unloading at the final place | B | B | B | B | B | B | S | B |
Where risk transfers, rule by rule
- EXW: at the factoryGoods made available at the seller's premises, not loaded. Factory loading is still at your risk.
- FCA at the seller's premisesOnce loaded on the buyer's collecting vehicle, for example our pickup truck.
- FCA elsewhere, CPT and CIPOn handover to the first carrier, such as a forwarder's warehouse or container yard.
- FAS: alongside the shipWhen placed on the quay or a barge beside the vessel. Mostly bulk and project cargo.
- FOB, CFR and CIF: on boardWhen the goods are on board the vessel at the port of loading in China.
- DAP: arrived, ready to unloadAt the named destination, still on the arriving vehicle. The buyer unloads and clears import.
- DPU: unloadedOnly after the seller has unloaded at the named place.
- DDP: arrived and clearedSame point as DAP, but the seller has also cleared import and paid duty and VAT.
Container, truck and rail cautions
FOB, CFR and CIF were written for cargo lifted over a ship's rail. A full container moves differently: it is trucked to the container yard days before the vessel loads, and from the yard gate the carrier controls it. Under FOB or CIF the seller still carries the risk until the box is on board, while it has no control over it and cannot prove the condition of goods inside a sealed container. That is why ICC recommends FCA, CPT and CIP for containerised goods. FOB and CIF remain legal and very common for Chinese exports, so you can use them, as long as both sides understand the gap.
- Containers where the buyer books freight: FCA at the supplier's or forwarder's warehouse instead of FOB.
- Containers where the seller books freight: CPT instead of CFR, and CIP instead of CIF.
- Truck or rail to Central Asia, Turkey or Europe: use FCA, CPT, CIP, DAP, DPU or DDP, never FOB, CFR, CIF or FAS.
- Letter of credit with FCA: add the on-board B/L clause so the seller can present the document the bank expects.
- DPU only when the seller or its forwarder can really arrange unloading at that place.
Choosing a rule for China to Gulf imports
| Your situation | Common choice | Why |
|---|---|---|
| Regular importer with your own forwarder | FOB named Chinese port, or better FCA supplier's warehouse | You control freight cost, routing and transit time, and see destination charges clearly. |
| Paying by letter of credit | FOB, CFR or CIF, or FCA with the on-board B/L option | Banks are used to on-board ocean B/Ls. |
| First-time buyer wanting one simple price | CFR or CIF Jebel Ali, or DAP to your door | Convenient, but check destination charges and who acts as importer of record. |
| Consolidating from many suppliers | FCA each supplier's warehouse, delivered to our Guangzhou warehouse | Each supplier files its own export declaration. |
| VAT-registered UAE company | DAP, with you clearing in your own name | Keeps the import VAT reverse charge with your company; avoid DDP by a foreign seller. |
Before you sign: writing the Incoterm
0/8Is there an Incoterms 2030?
Not yet. Incoterms 2020 has applied since 1 January 2020 and is still the current ICC edition. ICC has announced that it is starting work on a revision expected to be called Incoterms 2030, but as of November 2026 no draft, list of changes or publication date has been released. There is no Incoterms 2025 or 2026. Older editions such as 2010 can still be used, but only when the contract names them: under 2010, CIP required only ICC (C) cover and DAT existed instead of DPU.
Test yourself
Check your Incoterms
Frequently asked questions
What are the 11 Incoterms 2020 rules?
EXW, FCA, CPT, CIP, DAP, DPU and DDP can be used for any mode of transport. FAS, FOB, CFR and CIF are for sea and inland waterway transport only.
Which Incoterm is best for importing from China?
For most regular importers, FOB at a named Chinese port or FCA at the supplier's warehouse, with your own forwarder booking the freight. EXW is usually a poor choice from China because a foreign buyer cannot normally file the export declaration there.
Does CIF mean the seller is responsible until the goods arrive?
No. Under CIF the seller pays freight and minimum insurance to the destination port, but risk passes to the buyer once the goods are on board in China.
Is Incoterms 2010 still valid?
Yes, if the contract expressly refers to it. Incoterms 2020 is the current edition, so most new contracts should name 2020. Without a stated edition, it may be unclear which rules apply.
Do Incoterms decide when I pay or when I own the goods?
No. Incoterms cover delivery, risk, costs, clearance, documents and insurance. Payment terms and transfer of ownership must be agreed separately in the sales contract.
Can I use FOB for rail or truck shipments?
No. FOB, CFR, CIF and FAS are sea-only rules. For truck or rail freight use FCA, CPT, CIP, DAP, DPU or DDP with a precise named place.
Sources
- ICC – Incoterms rules (official page)
- ICC – Incoterms 2020 rules overview
- ICC – ICC prepares to launch Incoterms 2020 (drafting history)
- DHL – Next Incoterms revision (summary of ICC 2026 work plan)
- Trade Finance Global – Incoterms 2020 commentary (PDF)
- Lloyd's List Intelligence – Strait of Hormuz Brief, 30 September 2026
- AGBI – Gulf cargo stuck as shipping calls end of voyage (March 2026)
General information checked on the date shown. Rules and rates change: our team confirms the details for your shipment.