What are Incoterms 2020?

Incoterms 2020 are the current ICC (International Chamber of Commerce) standard terms of trade, published September 2019 and in force from 1 January 2020. They define 11 three-letter rules that split cost, risk, insurance and customs responsibility between seller and buyer in international goods trade. Incoterms 2020 supersede Incoterms 2010 but earlier versions remain valid if the contract explicitly references them.

What changed between Incoterms 2010 and Incoterms 2020?

Four material changes: (1) DAT was renamed DPU, Delivered at Place Unloaded, to make clear the seller handles unloading at destination; (2) FCA now allows the buyer to instruct the carrier to issue an on-board bill of lading to the seller, solving a long-standing letter-of-credit problem; (3) CIP requires higher insurance cover (Institute Cargo Clauses A instead of C) while CIF stays at Clauses C; (4) security-related cost splits are explicitly allocated to the buyer or seller rather than left ambiguous.

Which Incoterm is best for sea freight?

For container shipments, FCA or CIP/CPT are preferred because risk transfers on handover to the carrier, not at ship's rail. The sea-only terms (FOB, CFR, CIF, FAS) are designed for bulk and break-bulk where goods are physically loaded at the ship. Using FOB for container freight creates a gap in insurance and risk coverage between the terminal and the ship's rail, a routine source of disputes.

Who pays import duties under DDP?

The seller. DDP (Delivered Duty Paid) is the only Incoterm where the seller is responsible for clearing the goods for import, paying all duties, VAT where applicable, and handling the import declaration in the buyer's country. DDP creates significant VAT and permanent-establishment risk for sellers shipping into the EU and should be avoided unless the seller has an established import presence in the destination country.

Can I use Incoterms 2010 instead of 2020?

Yes, but only if the contract says so explicitly. Write 'FCA Rotterdam Incoterms 2010' or 'FCA Rotterdam Incoterms 2020'. If the contract says only 'FCA Rotterdam', most courts will default to the latest version (2020). Earlier versions (Incoterms 2000, 1990) are still valid if referenced, but are effectively obsolete outside legacy contracts.

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Incoterms 2020 explained

The 11 Incoterms 2020 rules in plain English: who pays for freight, who pays insurance, where risk transfers, and who handles import customs. Written for freight forwarders and logistics teams who quote, book and invoice against these rules every day — not for lawyers.

What Incoterms actually do

Incoterms (International Commercial Terms) are standard three-letter rules published by the ICC. They do not decide who owns the goods, when payment is due, or which country's law applies. They decide four operational things:

Who pays for the main carriage, pre-carriage and on-carriage.
Where risk transfers from seller to buyer (the "critical point" — if the truck turns over one metre before that point, it's the seller's loss).
Who is responsible for export and import customs formalities.
Whether insurance is required, and if so at what level of cover.

Incoterms 2020 is the ninth edition since 1936. It took effect 1 January 2020 and is the default reference when a contract says "FCA Rotterdam" without specifying a year. Earlier versions remain valid only if the contract names them explicitly (e.g. "FCA Rotterdam Incoterms 2010").

The two families

Incoterms 2020 splits the 11 rules into two groups based on mode of transport:

Any mode (incl. multimodal)

EXW · FCA · CPT · CIP · DAP · DPU · DDP
Use these for container freight, road, rail, air, courier and multimodal.

Sea & inland waterway only

FAS · FOB · CFR · CIF
Use only for bulk, break-bulk and cargo physically loaded at the ship. Not for containers.

The single most common Incoterms mistake is using FOB for container shipments. FOB transfers risk at "ship's rail" — a concept that does not apply to containerised freight handed to the carrier at a CY or CFS terminal days before vessel loading. For containers use FCA (seller bears risk to carrier handover) or CIP/CPT (seller continues to pay carriage and, under CIP, insurance beyond that point).

All 11 rules in one table

Columns: Carriage = who pays main freight; Insurance = who must insure; Export/Import = who clears customs; Risk transfers = the point at which loss becomes the buyer's problem.

Rule	Carriage	Insurance	Export	Import	Risk transfers
EXW	Buyer	—	Buyer	Buyer	At seller's premises
FCA	Buyer	—	Seller	Buyer	On handover to first carrier
CPT	Seller	—	Seller	Buyer	On handover to first carrier
CIP	Seller	Seller (Clauses A)	Seller	Buyer	On handover to first carrier
DAP	Seller	—	Seller	Buyer	On arrival, ready for unloading
DPU	Seller	—	Seller	Buyer	On unloading at destination
DDP	Seller	—	Seller	Seller	On arrival, ready for unloading
FAS	Buyer	—	Seller	Buyer	Alongside the vessel
FOB	Buyer	—	Seller	Buyer	On board the vessel
CFR	Seller	—	Seller	Buyer	On board the vessel
CIF	Seller	Seller (Clauses C)	Seller	Buyer	On board the vessel

Rule by rule, with a forwarder's angle

EXW — Ex Works

Minimum seller obligation. The buyer collects from the seller's factory door or warehouse and bears everything from there: loading, export customs, freight, import, unloading. Attractive to sellers in theory; a nightmare in practice because export customs remains the seller's legal obligation under most jurisdictions regardless of what EXW says. If you see EXW on a quote from a European seller shipping outside the EU, push for FCA instead.

FCA — Free Carrier

Seller clears export, buyer takes over on handover. FCA has two variants: "FCA seller's premises" (seller loads the vehicle, risk transfers on loading) and "FCA named place" (seller delivers to a terminal, risk transfers when the carrier takes charge, unloading is the carrier's job). Under Incoterms 2020, FCA now lets the buyer instruct the carrier to issue an on-board bill of lading to the seller — solving the letter-of-credit problem that made FOB the unavoidable (wrong) choice for container sales.

CPT & CIP — Carriage Paid To / Carriage and Insurance Paid To

Seller books and pays freight to a named destination, but risk still transfers at handover to the first carrier. The price-risk mismatch trips up buyers every time: the seller pays freight all the way to Rotterdam, but if the container is damaged in transit it is the buyer's claim. CIP adds insurance; since 2020 CIP requires Institute Cargo Clauses A (all-risks), raising the cover materially versus Clauses C under Incoterms 2010.

DAP, DPU, DDP — the D-group

Seller delivers to the named destination. Differences:

DAP: seller brings goods ready for unloading. Buyer unloads and clears import.
DPU: seller brings and unloads at the named place. Buyer clears import. (This is the only rule that obliges the seller to unload.)
DDP: seller bears everything including import duties, VAT and the import declaration. Use with extreme caution: DDP into the EU triggers VAT registration obligations and potential permanent-establishment risk for non-EU sellers.

FAS, FOB — the F-group, sea only

Seller delivers to or onto the vessel in the port of shipment. FAS = alongside, FOB = on board. Both intended for bulk and break-bulk. Using FOB for containers creates a gap between the terminal gate (where the carrier takes custody) and the ship's rail (where FOB transfers risk) — loss events in that window land in a zone neither party has clearly insured.

CFR & CIF — Cost and Freight / Cost, Insurance and Freight

Sea-only equivalents of CPT/CIP. Seller books and pays ocean freight to the named destination port. Risk transfers on loading. CIF adds insurance; unlike CIP (which moved to Clauses A in 2020), CIF remains at the minimum Institute Cargo Clauses C. This asymmetry is deliberate: CIF is used in commodity trade where buyers routinely arrange their own upgraded cover and sellers do not want to pay for it.

What changed from Incoterms 2010

DAT → DPU. "Delivered at Terminal" became "Delivered at Place Unloaded" because the destination is often not a terminal (a construction site, a customer warehouse). Unloading remains the seller's duty.
FCA on-board B/L option. The buyer and carrier may agree that the carrier will issue an on-board bill of lading to the seller after loading. This unlocks letter-of-credit financing for FCA shipments, which previously required awkward workarounds or outright (wrong) use of FOB.
CIP insurance raised to Clauses A. Under Incoterms 2010, both CIF and CIP defaulted to minimum Institute Cargo Clauses C. In 2020, CIP was lifted to Clauses A (all-risks); CIF stayed at C. Parties can still contract for a different level of cover.
Security-related cost splits. Costs for security clearances, screening and compliance are now explicitly allocated rule by rule rather than left in the "who-pays-what" ambiguity of 2010.
Own-transport recognition. The 2020 text explicitly recognises that the seller or buyer may use their own transport under FCA, DAP, DPU and DDP rather than contracting a third-party carrier.

The named place matters as much as the rule

"FCA" on its own is not a valid Incoterm. It must be followed by a named place with enough precision to identify the critical point: FCA Rotterdam APM Terminal, Maasvlakte II, Incoterms 2020 is a valid clause. FCA Rotterdam is ambiguous and a frequent source of disputes. The general rule: the more seller-side obligations an Incoterm carries, the more important the named place becomes, because the named place defines where the seller's responsibility ends.

Where Incoterms show up in operational work

For a freight forwarder, Incoterms govern six operational decisions that happen on every single shipment:

Quoting. The Incoterm decides whether freight is quoted to the seller or to the buyer, and which legs are included.
Booking confirmation. The Incoterm determines whether pre-carriage is booked by us or by the consignee.
Insurance. Under CIP and CIF, the seller's cover level must be stated. Under other rules, cargo insurance is optional; we still ask.
Customs declaration. Under DDP we act as indirect representative of the seller at import; under other D-rules we act for the buyer.
Invoicing. Incoterm drives which charges are invoiced to whom and which are passed through as disbursements.
Claims and liability. When something goes wrong, the Incoterm and the place fix the question of whose loss it is.

This is why correct Incoterm extraction from the booking email, contract or commercial invoice matters so much. A booking with a wrong or missing Incoterm has to be fixed manually downstream, usually by an ops person pinging the client, which burns 10-15 minutes and delays the booking. Logentic's booking email agent extracts the Incoterm, the named place and the year-of-reference from inbound emails and flags inconsistencies before the booking lands in the TMS.

Frequently asked questions

Are Incoterms 2020 legally binding?

Only when the contract references them. Writing "FCA Rotterdam" on a purchase order does not automatically pull in the Incoterms 2020 text; writing "FCA Rotterdam, Incoterms 2020" does. Without the reference, the court falls back on the applicable national commercial code (e.g. the UCC in the US, the Burgerlijk Wetboek in the Netherlands), which may say something quite different.

What's the difference between FOB and CIF?

Under FOB the buyer pays for the main ocean freight and arranges it; under CIF the seller pays and arranges freight plus minimum insurance. Risk transfers at the same point in both rules — on board the vessel in the port of shipment. FOB is buyer-controlled carriage; CIF is seller-controlled carriage with a freight cost baked into the invoice price.

Why is DDP risky for the seller?

Under DDP the seller is the importer of record, liable for import VAT, duties and a declaration in the buyer's country. For non-EU sellers shipping into the EU, this typically requires a VAT registration and can trigger a permanent-establishment argument with the local tax authority. Most corporate sellers avoid DDP and use DAP instead, with the buyer handling import clearance.

Which Incoterm is best for a first-time exporter?

FCA at a domestic export terminal or inland depot. It gives the exporter control of export customs (which they must handle anyway) and nothing else. The buyer's forwarder takes over all the complexity of international freight, arrival handling and import. This is the combination that minimises the exporter's operational and financial exposure.

When will Incoterms 2030 be published?

The ICC reviews Incoterms on a roughly ten-year cycle. Incoterms 2010 was published in 2010, Incoterms 2020 in September 2019 (taking effect 1 January 2020). A 2030 edition is therefore expected in late 2029. The ICC has not yet announced the working-group scope; based on industry commentary, likely topics include digital trade documents, sanctions-related cost allocation, and clearer rules for cross-border e-commerce returns.