Understand who arranges transport, who pays freight charges and when responsibility for cargo risk moves from seller to buyer.
Incoterms® are trade rules published by the International Chamber of Commerce (ICC). They help buyers and sellers agree the delivery responsibilities in a sale of goods.
Include the chosen rule, a precise named place or port, and the edition in your agreement. For example: FCA [named place], Incoterms® 2020 . Paying for transport does not always mean carrying the risk for the whole journey.
The summaries below cover the 11 rules in Incoterms® 2020. Historical terms from earlier editions are retained further down this guide for reference.
For road, air, rail, sea or a combination of transport modes.
The seller makes the goods available at the agreed location, without loading the collecting vehicle. The buyer arranges transport, insurance and export and import clearance. This places the least delivery responsibility on the seller.
The seller clears the goods for export and hands them to the buyer’s nominated carrier at the agreed location. At the seller’s premises, the seller loads the collecting vehicle; at another location, delivery is on the seller’s vehicle ready for unloading.
The seller arranges and pays transport to the named destination and handles export clearance. Risk passes when the goods are delivered to the carrier, rather than on arrival. The buyer handles import clearance.
The seller pays carriage and arranges cargo insurance to the named destination. Risk passes at delivery to the carrier. Under the 2020 rules, the default insurance cover is broader than CIF, unless the parties agree otherwise. The buyer handles import clearance.
The seller pays carriage and carries risk to the named destination, with goods ready to unload. The buyer unloads and handles import clearance, duties and taxes.
The seller pays carriage and carries risk until the goods are unloaded at the named destination. The buyer handles import clearance and charges. DPU replaced DAT in 2020; delivery is not restricted to a terminal.
The seller arranges transport, export and import clearance, including applicable duties and taxes, to the named destination. The goods arrive ready for the buyer to unload. Use this rule only when the seller can fulfil the destination’s import requirements.
For delivery alongside or on board a vessel.
Delivery occurs alongside the nominated vessel at the departure port. The seller handles export clearance; the buyer arranges onward shipping and bears subsequent risk.
Delivery and risk transfer occur on board the vessel at the departure port. The seller handles export clearance. Where a container is handed to a carrier before loading aboard, FCA may be more appropriate.
The seller pays freight to the destination port and handles export clearance. Risk transfers on board at the departure port, even though the seller pays onward freight.
CIF adds seller-arranged cargo insurance to CFR. Freight is paid to the destination port, while risk transfers on board at departure. Default insurance is minimum cover; agree any extra protection required.
These terms are from earlier editions and are not part of Incoterms® 2020. If one appears in your contract, confirm the agreed edition and its requirements.
An older rule for delivery at an agreed frontier point before the adjoining country’s customs border. The seller delivers on the arriving vehicle, not unloaded, with export clearance completed. The buyer handles import clearance.
An older sea freight rule. The seller brings the goods to the destination port and makes them available on board, before discharge and without import clearance. The seller bears costs and risk to that point.
An older sea freight rule. The seller brings the goods to the destination port and unloads them onto the quay or wharf. The buyer handles import clearance. The seller bears transport and discharge costs and risk up to delivery.
An older destination delivery rule. The seller bears transport costs and risk to the named place, with goods on the arriving vehicle ready to unload. Import formalities, duties and taxes are the buyer’s responsibility.
A 2010 rule under which the seller bears carriage costs and risk until unloading at the named terminal. The buyer handles import clearance. In the 2020 rules, DPU replaces DAT and allows a broader choice of delivery location.
Tell BC Universal about your cargo, origin, destination and proposed trade term so we can discuss the freight arrangements.
Get a free freight quoteThis is a plain-English summary, not the complete ICC rules or a substitute for the terms of your contract. Incoterms® is a registered trademark of the International Chamber of Commerce.
References: ICC Incoterms® 2020 · HMRC Incoterms guidance · Australian Border Force invoice terms
