At a Glance
- In force since
- 1 January 2020
- Publisher
- ICC (International Chamber of Commerce)
- Number of rules
- 11 (7 multimodal + 4 sea/inland waterway)
- Rule with maximum buyer obligation
- EXW (Ex Works)
- Rule with maximum seller obligation
- DDP (Delivered Duty Paid)
Multimodal rules (any mode of transport)
EXW (Ex Works): the seller makes the goods available at their own premises – the buyer bears all further costs and risks. FCA (Free Carrier): the seller delivers the goods, cleared for export, to a place named by the buyer. CPT (Carriage Paid To): the seller pays the carriage to the destination; risk passes when the goods are handed to the first carrier. CIP (Carriage and Insurance Paid To): as CPT, but with an obligation to insure the transport (110 % of the value of the goods, Institute Cargo Clauses A). DAP (Delivered at Place): the seller delivers to the agreed destination; the buyer bears unloading costs and import clearance. DPU (Delivered at Place Unloaded): as DAP, but the seller also bears the unloading costs. DDP (Delivered Duty Paid): the maximum obligation for the seller – including customs clearance and import duties.
Sea and inland waterway rules
FAS (Free Alongside Ship): the seller brings the goods alongside the vessel at the port of export; from that point the buyer bears all costs and risks. FOB (Free On Board): risk and costs pass when the goods are loaded on board the vessel. CFR (Cost and Freight): the seller pays the sea freight to the port of destination. CIF (Cost, Insurance and Freight): as CFR, but the seller also takes out minimum insurance cover. Note: FOB, CFR and CIF should only be used for conventional sea freight, not for containers – FCA and CPT are better suited to container traffic.
Transfer of risk and costs at a glance
The decisive difference between the rules lies in the point of transfer. Under EXW the buyer carries the full risk from the very first metre. Under DDP the seller takes on everything up to the destination. Important: the transfer of costs and the transfer of risk need not occur at the same point – under CFR, risk passes at loading while costs pass only at the port of destination.
Which Incoterm for which transport?
For overland transport within Europe, DAP and DDP are the most common, because buyers usually expect a complete delivery to their gate. FCA is suitable where the buyer has logistics contracts of their own. For sea freight, FOB offers maximum transparency. Despite its apparent simplicity, EXW is problematic for international transport, because the buyer also has to handle export customs formalities in the seller's country.
