Reference

Incoterms 2020, demystified.

All 11 Incoterms explained in plain language — with a clear split of who pays, who insures, and where the risk transfers. Bookmark this page; you will come back to it.

See all 11 terms Read the full guide

🇧🇷×🇸🇦Used on every BRHUB contract

official terms

The 11 terms

Each term, side by side

Group A applies to any mode of transport. Group B applies only to sea and inland-waterway transport.

Any mode Sea & inland waterway

Group A — Any mode of transport (rules for any mode of transport, including multimodal)

EXW

EXW · Ex Works

Buyer takes delivery at the seller's premises and handles everything from there. Maximum buyer responsibility.

Seller coversGoods made available at their premises, ready for collection.

Buyer coversLoading, export clearance, freight, insurance, import clearance, delivery.

FCA

FCA · Free Carrier

Seller delivers cleared for export to the carrier nominated by the buyer at a named place.

Seller coversPre-carriage to named place, export clearance, loading where applicable.

Buyer coversMain carriage, insurance, import clearance, on-carriage to final destination.

CPT

CPT · Carriage Paid To

Seller pays freight to the named destination, but risk transfers to the buyer when goods are handed to the first carrier.

Seller coversExport clearance and main carriage to the named destination.

Buyer coversInsurance, import clearance, on-carriage from named destination.

CIP

CIP · Carriage and Insurance Paid To

Same as CPT, but the seller also takes out insurance for the main carriage (Institute Cargo Clauses A by default).

Seller coversExport clearance, main carriage, insurance to named destination.

Buyer coversImport clearance, on-carriage from named destination.

DAP

DAP · Delivered at Place

Seller delivers when goods are placed at the buyer's disposal at the named place, ready for unloading.

Seller coversExport clearance, main carriage, on-carriage to named place.

Buyer coversUnloading, import clearance, duties and taxes.

DPU

DPU · Delivered at Place Unloaded

Seller delivers when goods are unloaded at the named place. The only Incoterm where the seller must unload.

Seller coversExport clearance, main carriage, on-carriage and unloading at named place.

Buyer coversImport clearance, duties and taxes.

DDP

DDP · Delivered Duty Paid

Maximum seller responsibility — seller delivers cleared for import to the named destination. Rare; use with care.

Seller coversEverything: export, main carriage, insurance, import clearance, duties and taxes, delivery.

Buyer coversReceive the goods at the named destination.

Group B — Sea & inland waterway only (rules for sea-only shipments where goods are loaded on board a vessel)

FAS

FAS · Free Alongside Ship

Seller delivers when goods are placed alongside the vessel at the named port of shipment. Use for bulk/break-bulk, not containers.

Seller coversPre-carriage to port, alongside-ship delivery, export clearance.

Buyer coversLoading on board, main carriage, insurance, import clearance, delivery.

FOB

FOB · Free On Board

Seller delivers on board the vessel at the named port. Risk transfers when goods cross the ship's rail. Bulk/break-bulk.

Seller coversPre-carriage to port, loading on board, export clearance.

Buyer coversMain carriage, insurance, import clearance, delivery.

CFR

CFR · Cost and Freight

Seller pays freight to the destination port. Risk transfers when goods are loaded on board at origin. No insurance.

Seller coversPre-carriage, loading, export clearance, main carriage to destination port.

Buyer coversInsurance, import clearance, on-carriage from destination port.

CIF

CIF · Cost, Insurance and Freight

CFR plus the seller pays insurance (minimum cover, Institute Cargo Clauses C, by default).

Seller coversPre-carriage, loading, export clearance, main carriage and insurance to destination port.

Buyer coversImport clearance, on-carriage from destination port.

Three things to remember

Before you pick a term, internalise these.

Incoterms split cost and risk only. They do not transfer title — that is your contract.
Incoterms do not cover payment. Pair them with an explicit payment term (TT, LC, escrow).
Always state Incoterms 2020 (the version) and the named place (e.g. "FOB Santos").
Match the term to the mode: only four (FAS, FOB, CFR, CIF) work for sea freight in containers.

Frequently asked

Incoterms — frequently asked

I see "Incoterms 2010" on an old contract — does it still apply?

Yes, Incoterms 2010 contracts remain valid; ICC versions co-exist. New contracts should reference Incoterms 2020 since it is the current edition.

Which Incoterm should I use as a first-time buyer?

CIF or DAP for sea freight, CPT or DAP for multimodal — these put the freight burden on the seller and limit your operational complexity. As you scale, FOB/FCA give you more control over freight pricing.

Can I use FOB for a containerised shipment?

Technically you can, but ICC strongly recommends FCA instead — risk transfer at the ship's rail does not align with how containers are actually handled in modern terminals.

Where does title transfer?

Incoterms do not address title. Title transfer is governed by the sale contract and applicable law. Specify it explicitly in your contract.

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