INCOTERMS® 2020
When Buying & Selling...
INCOTERMS© 2020 rules are the official commercial terms published by the International Chamber of Commerce. They spell out in detail the globally-accepted rules for buyers and sellers engaged in global trade. The following information is meant to serve only as a guide when making INCOTERMS© 2020 training & consulting selections. For further analysis and questions on how regulations apply to your unique operations, contact the INCOTERMS 2020 training & consulting experts at Star USA.
International Commercial Terms
General Information
INCOTERMS® 2020 should be set in the purchasing or sales agreement, but may vary on an order-by-order basis. It is important that all participants in the process be aware of the impact when establishing INCOTERMS® Rules. Preferred INCOTERMS® may vary based on the mode of transport (Air vs. Ocean), the regions involved (Asia vs. North America, for example), the role of the parties involved, the commodity being bought or sold, and the terms of sale.
Risk, Cost, & Responsibility
INCOTERMS® Rules dictate the transfer of risk and responsibility, as well as which party is responsible for specific aspects of the transaction - including the payment of duties, the import and export clearance of the goods, the arrangement and payment of freight, and more.
Title Transfer
Title transfer is not governed by INCOTERMS® 2020; transfer of title is established in the purchasing or sales agreement, or as specified in the Terms and Conditions Contract.
This Star USA webinar produced by our INCOTERMS® 2020 training & consulting team provides insight on using the INCOTERMS® rules in your international supply chain.
You will learn:
- Applications and limitations of the Incoterms® rules
- Advantages for purchasing & procurement
- Advantages for sales & customer service
- How INCOTERMS® rules impact your Total Landed Cost
- Choosing & avoiding risk to maximize market advantage
Relevant changes in INCOTERMS® 2020 compared to INCOTERMS® 2010:
- DAT (Delivered at Terminal) is renamed DPU (Delivered at Place Unloaded)
- FCA (Free Carrier) now allows for Bills of Lading to be issued after loading
- CIF (Cost, Insurance and Freight) and CIP (Carriage and Insurance Paid To) set out new standard insurance arrangements, but the level of insurance continues to be negotiable.
- Where listed, cost allocation is stated more precisely
- Security-related obligations are easier to understand.
- "Explanatory Notes for Users" for each Incoterm® have replaced the Guidance Notes.
- FCA (Free Carrier), DAP (Delivered at Place), DPU (Delivered at Place Unloaded) and DDP (Delivered Duty Paid) now take account of parties arranging their own transport rather than using a third party provider.
- CIP now requires as default insurance coverage ICC A or equivalent. It was ICC C under Incoterms® 2010. Required insurance coverage under CIF remains
All Modes of Transportation
EXWEx Works
FCAFree Carrier
CPTCarriage Paid To
CIPCarriage & Insurance Paid To
DAPDelivered At Place
DPUDelivered At Place Unloaded
DDPDelivered Duty Paid
Vessel - Sea & Inland Waterway Only
FASFree Alongside Ship
FOBFree On Board
CFRCost & Freight
CIFCost Insurance & Freight
Mexico to USA
You Pay Freight
Land(Call for Guidance)
AirFCAOrigin Airport
WaterFCAOrigin Port
Customer Pays Freight
Land DAPDestination Point
Air DAPDestination Airport
WaterDAPDestination Port
Rest of World to USA
You Pay Freight
Air FCAOrigin Airport
WaterFCAOrigin Port
Customer Pays Freight
AirDAPDestination Airport
WaterDAPDestination Port
USA to Mexico
You Pay Freight
Land(Call for Guidance)
AirDAPDestination Airport
WaterCPTDestination Port
Customer Pays Freight
LandFCAOrigin Point
AirFCAOrigin Airport
WaterFCAOrigin Port
USA to Rest of World
You Pay Freight
AirDAPDestination Airport
WaterCPTDestination Port
Customer Pays Freight
AirFCAOrigin Airport
WaterFCAOrigin Port
Buyer / Seller Responsibility
| Service/ Event | EXW | FCA | CPT | CIP | DAP | DPU | DDP |
|---|---|---|---|---|---|---|---|
| Export Pack | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Mark & Label | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Block & Brace | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer |
| Export Clearance (License, EEI/AES) | Buyer | Seller | Seller | Seller | Seller | Seller | Seller |
| Arrange Insurance | Either | Either | Either | Seller | Either | Either | Either |
| Select Carrier | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller |
| Select Freight Forwarder | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller |
| Arrange & Pay Pre-Carriage | Buyer | Either | Seller | Seller | Seller | Seller | Seller |
| Pay Origin Terminal Charges | Buyer | Either | Seller | Seller | Seller | Seller | Seller |
| Arrange & Pay Main Carriage | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Seller |
| Load Main Carriage | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller |
| Pay Destination Terminal Charges | Buyer | Buyer | Either | Either | Either | Either | Seller |
| Arrange & Pay On-Carriage | Buyer | Buyer | Either | Either | Either | Either | Seller |
| Arrange & Pay Import Clearance | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller |
| Pay Duties, Taxes & Fees | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller |
| Unload From On-Carriage | Buyer | Buyer | Buyer | Buyer | Buyer | Seller | Buyer |
Applying these terms
EXW
Seller places shipment at disposal of buyer at Seller's facility. Seller is not responsible to load buyer's carrier. Export clearance is buyer's responsibility.
FCA
Seller delivers shipment to Buyer's selected carrier at "F" geographic location. Seller loads first carrier.
CPT CIP
Seller arranges transport to "C" delivery port or place. "I" requires seller to obtain minimum insurance coverage. Seller fulfills delivery obligation upon delivery to carrier.
DAP DPU DDP
Seller arranges and delivers to destination place.
DAP - Delivered at place
DPU - Delivered at place unloaded
DDP - Delivered Duty Paid
Qualifiers: EXW Seller's Facility
Risk Transfers: Seller's Premises
Freight: Collect from EXW point
Qualifiers: FCA Seller's Facility
FCA Forwarder's Warehouse (Seller's Country)
FCA Airport (Seller's Country)
FCA Steamship Terminal (Seller's Country)
Risk Transfers: Named Place of Delivery
Freight: Collect from F Delivery Point
Qualifiers: CPT or CIP Destination Airport
CPT or CIP Destination Terminal
CPT or CIP Buyer's Destination
Risk Transfers: At point cargo delivered to carrier
Freight: Prepaid by seller to destination port or place
Qualifiers: FCA Seller's Facility
DPU, DAP, DDP Destination Airport
DPU, DAP, DDP Destination Terminal
DPU, DAP, DDP Buyer's Destination
Risk Transfers: Named Place of Delivery
Freight: Prepaid by seller to destination port or place