Foreign trade
Incoterms 2020: where cost and risk change hands
Eleven delivery terms, each answering a single question · at which point do cost and transit risk pass from seller to buyer?
Two families, eleven rules
| Rule | Risk passes to buyer | Who arranges main carriage |
|---|---|---|
| Any mode of transport | ||
| EXW Ex Works | At the seller's premises, before loading | Buyer |
| FCA Free Carrier | On handover to the carrier | Buyer |
| CPT Carriage Paid To | On handover to the first carrier | Seller (pays freight; risk passes early) |
| CIP Carriage+Insurance Paid | On handover to the first carrier | Seller + all-risk insurance (ICC A) |
| DAP Delivered at Place | At destination, on the vehicle | Seller |
| DPU Delivered at Place Unloaded | At destination, unloaded | Seller |
| DDP Delivered Duty Paid | At destination, import duties paid | Seller |
| Sea and inland waterway only | ||
| FAS Free Alongside Ship | Alongside the vessel on the quay | Buyer |
| FOB Free On Board | When goods are loaded on board | Buyer |
| CFR Cost and Freight | When loaded on board | Seller (risk still passes at loading) |
| CIF Cost, Insurance, Freight | When loaded on board | Seller + minimum-cover insurance (ICC C) |
The three most common mistakes
- Writing FOB/CIF for containerised cargo. These rules tie risk transfer to "loading on board", yet a container is handed to the terminal and leaves the seller's control much earlier. For containers the right counterparts are FCA / CPT / CIP.
- Forgetting export clearance under EXW. Under EXW everything, including the export declaration, belongs to the buyer; a foreign buyer without a Turkish presence struggles with it. FCA usually serves both sides better.
- Assuming CIF insurance is comprehensive. CIF requires only minimum cover (ICC C); for high-value cargo, broader cover must be agreed separately.
State the term on your quote request if you know it; if not, describe
the deal in your own words and we will point to the right term together.
Official sources
- Incoterms rules · ICC
- International Trade Centre · ITC
External links are provided for information; their content belongs to the respective organisations.
Related articles
Request a quote on this topic
A sentence or two is enough; we start work on your request the same day.
Your request has been sent
By phone: +90 212 551 15 34