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Incoterms® 2020

Discover everything you need to know here about Incoterms®, a codified set of contractual provisions relating to the transport of goods in international trade.

Incoterms 2020

Incoterms®: definition and use in customs

Incoterms® are a codification developed by the International Chamber of Commerce (ICC) to standardise the codes and languages used in international trade.

A contraction of “International Commercial Terms“, Incoterms®:

  • determine the mutual obligations of the seller and the buyer within an international purchase/sales contract;
  • specify respective responsibilities but do not define when ownership is transferred;
  • set the sharing of costs and the division of risks;
  • are one of the elements that determine the customs value (see Customs Publication Library, “Customs value”).

What are the 11 Incoterms® 2020?

7 multimodal Incoterms®

EXW – FCA – CPT – CIP – DAP – DPU – DDP / Applicable to any mode of transport

4 maritime Incoterms®

FAS – FOB – CFR – CIF / Applicable to maritime and inland waterway transport

How does Incoterms® codification work?

The Incoterms® 2020 codification consists of 4 alphanumeric characters including 3 letters representing the Incoterm chosen in the contract and 1 digit (1, 2 or 3) locating the transport contract according to the following provisions:

  1. Location in France;
  2. Location in another European Union Member State;
  3. Location outside the European Union.

Incoterms® are divided into 4 groups starting respectively with the letter C, D, E or F, reflecting different levels of responsibility (from minimum to maximum) incumbent on one or other of the parties involved in the exchange (buyer or seller as the case may be) at the different stages of goods transport.

The use of Incoterms® is not mandatory but strongly recommended in international trade.

See the Incoterms® 2020 table

7 multimodal Incoterms®

These international trade rules are applicable to any mode of transport.

EXW

EXW

The seller has fulfilled their delivery obligation when the goods are made available at their establishment (workshop, factory, warehouse, etc.). The buyer bears all costs and risks inherent in moving the goods from the seller’s establishment to the desired destination. The seller does not have to load the goods onto any collection vehicle. This term represents the minimum obligation for the seller. To be used mainly in national trade.

FCA

FCA

The seller has fulfilled their delivery obligation when they have handed over the goods, cleared for export, to the carrier designated by the buyer at the agreed point. The buyer chooses the mode of transport and the carrier. The buyer pays for the main transport. The transfer of costs and risks occurs when the carrier takes charge of the goods. The “Bill of Lading on board” option allows the buyer and seller to agree that the seller can obtain the bill of lading.

CPT

CPT

The seller chooses the mode of transport and pays the freight for the transport of the goods to the agreed destination. They clear the goods for export. When the goods are handed over to the main carrier, the risks are transferred from the seller to the buyer.

CIP

CIP

The seller has the same obligations as in CPT, but must also provide all-risk insurance. The seller clears the goods for export.

DAP

DAP

The seller must deliver the goods by placing them at the buyer’s disposal on the arriving means of transport ready for unloading at the agreed place, if specified, at the agreed place of destination on the agreed date or within the agreed period. The seller assumes the risks involved in bringing the goods to the place of destination.

DPU

DPU

The seller has fulfilled their obligations when the goods are placed at the buyer’s disposal, unloaded from the means of transport at the agreed place of destination (this place can be a terminal, a warehouse or the buyer’s premises).

DDP

DDP

Unlike the term EXW ex-works, this term designates the maximum obligation of the seller. The seller does everything, including import customs clearance and payment of duties and taxes due. The transfer of costs and risks takes place upon delivery to the buyer. Unloading is the responsibility of the buyer in terms of costs and risks.

4 maritime Incoterms®

These rules are specifically applicable to maritime and inland waterway transport.

FAS

FAS

The seller has fulfilled their delivery obligation when the goods have been placed alongside the ship, on the quay at the agreed port of shipment. The buyer must bear all costs and risks of loss or damage to the goods. The term FAS imposes on the seller the obligation to clear the goods for export.

FOB

FOB

The seller has fulfilled their delivery obligation when the goods are placed on board the ship at the designated port of shipment. The seller clears the goods for export. The buyer chooses the ship and pays the sea freight. The transfer of risks occurs when the goods are on board the ship. From that moment, the buyer must bear all costs.

CFR

CFR

The seller must choose the ship and pay the costs and freight necessary to bring the goods to the designated port of destination. Export formalities are the responsibility of the seller. The transfer of risks occurs when the goods are placed on board the ship.

CIF

CIF

The seller has the same obligations as in CFR but must also provide minimum maritime insurance. Export formalities are the responsibility of the seller. The goods travel, on maritime or inland waterway transport, at the buyer’s risk. The transfer of risks occurs when the goods are placed on board the ship.

Departure/arrival: an essential distinction in Incoterms®

Sales at departure (SD)
8 Incoterms® cover the main transport, the goods travel at the buyer’s risk.

  • Multimodal Incoterms® – sale at departure: EXW / FCA / CPT / CIP
  • Maritime Incoterms® – sale at departure: FAS / FOB / CFR / CIF

Sales at arrival (SA)
3 Incoterms® cover the main transport, the goods travel at the seller’s risk.

  • Multimodal Incoterms® – sale at arrival: DAP / DPU / DDP
See the Incoterms® 2020 table

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