Understanding Incoterms 2020

Incoterms are divided into two categories based on transport mode:

  • Any Mode of Transport (7 terms): EXW, FCA, CPT, CIP, DAP, DPU, DDP —适用于 all transport including air, rail, road, and multimodal
  • Sea & Inland Waterway Only (4 terms): FAS, FOB, CFR, CIF —适用于 sea freight and inland waterway transport only

Key Concepts

  • Risk Transfer: The point at which responsibility for loss or damage passes from seller to buyer
  • Cost Allocation: Which party pays for each component (freight, insurance, customs, loading)
  • Delivery Point: The physical location where delivery is considered complete
  • Export/Import Clearance: Who handles customs documentation and duties at origin and destination

Choosing the Right Incoterm

  • EXW — Seller's minimum obligation. Buyer handles everything from collection.
  • FOB — Most common for sea freight. Seller loads on vessel; buyer arranges freight.
  • CIF — Seller pays freight + insurance to destination port. Risk transfers at origin.
  • DDP — Seller's maximum obligation. Delivered with duties paid. Buyer does nothing.
  • FCA — Versatile. Seller delivers to carrier nominated by buyer. Good for multimodal.