liminfoIncoterms
Free reference guide: Incoterms
About Incoterms
The Incoterms 2020 Reference is a comprehensive guide to all 11 International Commercial Terms published by the International Chamber of Commerce (ICC). It covers each trade term with detailed explanations of risk transfer points, cost allocation between seller and buyer, transport mode requirements, and insurance obligations.
The reference includes in-depth entries for major terms like EXW (Ex Works), FOB (Free On Board), CIF (Cost, Insurance & Freight), and DDP (Delivered Duty Paid), with specific details on seller and buyer obligations under each term. It also covers FCA, FAS, CFR, CPT, CIP, DAP, and DPU with their unique characteristics.
Practical comparison guides (FOB vs FCA, CIF vs CIP, DDP vs DAP) help users choose the right term for their trade scenario. The reference also documents key changes in the 2020 revision, including the DAT-to-DPU rename, FCA bill of lading option, and CIP insurance upgrade to ICC(A) all-risk coverage.
Key Features
- Complete coverage of all 11 Incoterms 2020 trade terms with ICC-aligned definitions
- Detailed risk transfer points specifying exactly when responsibility shifts from seller to buyer
- Cost allocation breakdowns showing which party pays for transport, insurance, clearance, and duties
- Seller and buyer obligation checklists for EXW, FOB, CIF, DDP, and FCA terms
- Side-by-side comparison guides: FOB vs FCA, CIF vs CIP, DDP vs DAP with selection criteria
- FCA 2020 bill of lading option and place-of-delivery differences documented
- CIF minimum insurance requirements (ICC(C), 110% contract value) vs CIP all-risk ICC(A) coverage
- Incoterms 2020 key changes summary: DAT to DPU rename, own transport, security requirements
Frequently Asked Questions
What are Incoterms 2020?
Incoterms (International Commercial Terms) are a set of 11 standardized trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international trade. The 2020 edition, effective January 1, 2020, includes EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAP, DPU, and DDP.
What is the difference between FOB and FCA?
FOB (Free On Board) is for sea/inland waterway transport only, with risk transferring when goods are loaded on board the vessel. FCA (Free Carrier) works with all transport modes, with risk transferring when goods are delivered to the carrier. FCA is better for container cargo, while FOB suits bulk/conventional shipments.
How does CIF insurance work?
Under CIF, the seller must obtain minimum insurance coverage at ICC(C) terms for at least 110% of the contract value in the contract currency. This provides basic coverage. If the buyer needs broader protection, they should negotiate CIP instead, which requires ICC(A) all-risk coverage under the 2020 revision.
What changed from Incoterms 2010 to 2020?
Key changes include: DAT was renamed to DPU (Delivered at Place Unloaded), FCA gained a bill of lading issuance option, CIP insurance was upgraded from ICC(C) to ICC(A) all-risk coverage, own transport was explicitly permitted, and security-related requirements were strengthened.
When should I use DDP vs DAP?
DDP (Delivered Duty Paid) means the seller bears all costs including import duties and taxes and handles import clearance. DAP (Delivered at Place) is similar but the buyer handles import clearance and pays duties/taxes. Use DAP when the seller cannot handle import formalities in the destination country.
Which Incoterms are sea-transport only?
Four Incoterms are restricted to sea and inland waterway transport: FAS (Free Alongside Ship), FOB (Free On Board), CFR (Cost and Freight), and CIF (Cost, Insurance & Freight). The remaining seven terms (EXW, FCA, CPT, CIP, DAP, DPU, DDP) work with any transport mode including air, road, rail, and multimodal.
What is EXW and when should I avoid it?
EXW (Ex Works) places minimum obligation on the seller, who only needs to make goods available at their premises. The buyer bears all export/import clearance, transport, and risk. Avoid EXW when the buyer is unfamiliar with the seller country export procedures, as the buyer must handle export clearance.
What is the FCA bill of lading option in Incoterms 2020?
The 2020 revision added an option under FCA where the buyer can instruct their carrier to issue a bill of lading to the seller after loading. This solves a common problem in letter of credit (L/C) transactions where banks require an on-board B/L but FCA delivery occurs before vessel loading.