EXW
Ex Works
Seller makes goods available at their premises. Buyer handles nearly everything after pickup.
Best for domestic-style pickupsWhat are Incoterms?
Incoterms are internationally recognized trade rules published by the International Chamber of Commerce. They help buyers and sellers define who is responsible for transportation, export handling, import handling, insurance, and risk at each point in an international shipment.
They do not replace a sales contract, purchase order, payment agreement, or logistics plan. Instead, they create a shared language so everyone understands where the seller's responsibility ends and the buyer's responsibility begins.
Incoterms responsibility timeline showing where costs and risks transfer between seller and buyer.
The 11 Incoterms
Choose the rule that matches the shipment, handoff, and risk profile.
Each Incoterm defines a different operating model for cost, control, and delivery responsibility.
FCA
Free Carrier
Seller delivers goods to a named carrier or place after export clearance.
Best for container shipmentsFAS
Free Alongside Ship
Seller delivers goods alongside the vessel at the named port of shipment.
Best for bulk ocean cargoFOB
Free On Board
Seller delivers goods loaded on board the vessel. Risk transfers once goods are on board.
Best for non-container ocean freightCFR
Cost and Freight
Seller pays ocean freight to destination port, but risk transfers when goods load on vessel.
Best for ocean freight without insuranceCIF
Cost, Insurance and Freight
Seller pays freight and minimum insurance to destination port, while risk transfers earlier.
Best for ocean shipments needing seller insuranceCPT
Carriage Paid To
Seller pays carriage to a named destination, but risk transfers to buyer at carrier handoff.
Best for multimodal transportCIP
Carriage and Insurance Paid To
Seller pays carriage and higher insurance coverage to the named destination.
Best for air and multimodal insured shipmentsDAP
Delivered at Place
Seller delivers goods ready for unloading at the named destination. Buyer handles import clearance.
Best for seller-controlled deliveryDPU
Delivered at Place Unloaded
Seller delivers and unloads goods at the named destination place.
Best when seller controls unloadingDDP
Delivered Duty Paid
Seller carries the most responsibility, including import clearance and duties at destination.
Best for fully managed delivery
Common mistakes
Avoid the Incoterm errors that create cost and delivery problems.
Using FOB for containers
Container cargo is usually handed to a carrier before vessel loading, which often makes FCA a better fit.
Forgetting the named place
An Incoterm without a place leaves teams guessing where cost and risk transfer.
Ignoring insurance
Only CIF and CIP require the seller to provide insurance, and coverage levels differ.
Not specifying Incoterms 2020
Always name the rule version so buyers, sellers, forwarders, and banks apply the same standard.
Thinking Incoterms define payment
Incoterms do not decide title transfer, payment timing, credit terms, or ownership.
How to write them
Use the rule, named place, and Incoterms® 2020 version.
Correct examples
FOB Shanghai Incoterms® 2020 DAP Dallas Texas Incoterms® 2020 CIP Hamburg Airport Incoterms® 2020
Incorrect examples
FOB DAP CIF
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FAQ
Incoterms questions exporters ask most often.
An Incoterm is an international trade rule that defines responsibilities between seller and buyer for delivery, costs, and risk transfer.
Common choices include FCA, FOB, CIF, DAP, and DDP, but the right rule depends on transport mode, control, insurance, and destination responsibilities.
No. Incoterms do not define title transfer, ownership, payment timing, or credit terms. Those belong in the sales contract.
It depends on the Incoterm. For example, CFR, CIF, CPT, and CIP require the seller to pay main carriage, while EXW and FCA shift more freight responsibility to the buyer.
Use the rule that matches your delivery control, transport mode, risk tolerance, insurance needs, and customer agreement. For container exports, FCA is often more precise than FOB.
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