Incoterms® 2020 Delivery Terms: EXW, FCA, FOB, CFR, CIF, DAP, DDP and more

INCOTERMS® 2020 Delivery Terms

Incoterms® are standard rules published by the International Chamber of Commerce (ICC) that define the delivery obligations, the allocation of costs and the point at which the risk of loss or damage passes between seller and buyer. The current version is Incoterms® 2020 (in force since 1 January 2020). The 11 rules are divided into two groups:

• Rules for any mode or modes of transport: EXW, FCA, CPT, CIP, DAP, DPU, DDP
• Rules for sea and inland waterway transport only: FAS, FOB, CFR, CIF

Summary table

There are two critical points in the "C" group rules: Risk passes in the country of departure, but freight is paid by the seller up to the destination. In other words, "the seller pays the freight" does not mean "the risk stays with the seller until arrival".

The rules one by one

EXW – Ex Works

• Use: The rule with the fewest obligations for the seller; preferred when the buyer has a strong logistics network of its own, or for domestic sales.
• Common mistake: Using EXW for exports. The buyer is often unable to file the export declaration in the seller's country, and the seller has no obligation to load the goods. In most international sales, FCA is the more suitable option.

FCA – Free Carrier

• Use: The most suitable "buyer pays the freight" rule for container, road, air and combined transport. For delivery at the seller's premises, the seller loads the goods; for delivery elsewhere, the goods are delivered on the seller's vehicle, ready for unloading.
• New in 2020: If the parties agree, the buyer may instruct its carrier to issue an "on board" bill of lading to the seller (important for letter of credit transactions).
• Common mistake: Not stating the place of delivery clearly (e.g. "FCA seller's warehouse, Gaziantep" or "FCA Mersin container terminal").

CPT – Carriage Paid To

• Use: A rule for any mode under which the seller pays the freight up to the destination, but the risk passes to the buyer on handover to the first carrier.
• Common mistake: Assuming the risk remains with the seller until the destination; if the buyer does not take out its own insurance, it may be unprotected against damage in transit.

CIP – Carriage and Insurance Paid To

• Use: CPT + cargo insurance arranged by the seller. With Incoterms 2020, the minimum cover was raised to the level of Institute Cargo Clauses (A) (all risks); the insured amount must be at least 110% of the contract price and in the currency of the contract.
• Common mistake: Insuring under ICC (C); this does not satisfy the CIP obligation (unless the parties have expressly agreed on lower cover).

DAP – Delivered at Place

• Use: A rule under which the seller carries the goods to the named place in the buyer's country and the buyer pays the import duties. Very common in road exports (e.g. truck shipments from Türkiye to Europe/the Middle East).
• Common mistake: Not clarifying who pays the unloading costs and the waiting costs at import customs (demurrage/waiting-related charges).

DPU – Delivered at Place Unloaded

• Use: Replaced DAT from Incoterms 2010; the place of delivery no longer has to be a "terminal". It is the only rule under which the seller delivers the goods unloaded.
• Common mistake: The seller accepting DPU without having the means to unload at the destination (forklift, crane, permits).

DDP – Delivered Duty Paid

• Use: The maximum obligation for the seller: freight, import customs formalities, customs duties and VAT – everything is on the seller. Seen in e-commerce and "door-to-door" sales.
• Common mistake: The seller agreeing to DDP without importer-of-record status / tax registration in the destination country; import VAT that cannot be recovered, and unexpected tax costs.

FAS – Free Alongside Ship

• Use: Bulk cargo, project cargo, heavy and bulky goods (e.g. grain, timber, machinery).
• Common mistake: Using it for containerized cargo; containers are generally delivered to the terminal rather than alongside the ship, in which case FCA should be used.

FOB – Free on Board

• Use: The classic sea rule; the buyer arranges the vessel/freight and the seller loads the goods on board. Ideal for bulk and conventional cargo.
• Common mistake: Using FOB for containerized cargo. Containers are delivered to the terminal days before being loaded on board, and any damage occurring during this period remains with the seller. The ICC recommends FCA for containerized cargo. Non-maritime uses such as "FOB factory" or "FOB Istanbul (airport)" are also incorrect.

CFR – Cost and Freight

• Use: The seller pays the freight up to the port of destination; risk passes on loading on board at the port of loading. Common for bulk commodities.
• Common mistake: The buyer not taking out insurance, assuming "the freight is paid, so the risk is with the seller too". For containers, CPT is more appropriate.

CIF – Cost, Insurance and Freight

• Use: CFR + insurance arranged by the seller. The minimum cover remains ICC (C) (limited risks); the parties may agree on higher cover in the contract.
• Common mistake: Not knowing that ICC (C) in most cases does not cover risks such as theft, wetting and handling damage. For containerized/finished goods, CIP or CIF + ICC (A) is recommended.

Main differences between Incoterms 2020 and 2010

1. DAT → DPU: The "Delivered at Terminal" rule was removed and replaced by "Delivered at Place Unloaded" (DPU), which now follows DAP in the list of rules.
2. CIP insurance raised: The minimum cover under CIP became ICC (A); under CIF it remains ICC (C).
3. "On board" bill of lading under FCA: If the parties agree, the buyer may have its carrier issue an on-board bill of lading in the seller's name.
4. Carriage with the seller's/buyer's own means of transport: Under FCA, DAP, DPU and DDP, it is expressly recognized that the parties may carry the goods with their own vehicles without using a third-party carrier.
5. Security-related obligations (e.g. advance notification, screening) are defined more clearly within the allocation of costs.
6. Costs consolidated in a single list: In each rule, all cost items are listed in a single article (A9/B9); the explanatory notes for users were expanded.
7. The order of the articles was rearranged (delivery and risk articles were moved forward).

What Incoterms do not cover

Incoterms only govern delivery, costs and the transfer of risk. They do not determine:

• Transfer of ownership – subject to the sales contract and the applicable law.
• Method and terms of payment – must be set out separately in the contract (e.g. letter of credit, documents against payment).
• The sale price, breach of contract and its consequences, force majeure, dispute resolution.
• The content of the contract of carriage (the contract with the carrier is separate).

Correct notation

An Incoterms rule should always be written as rule + named place (and, where possible, the full address/terminal) + version year. Examples:

• FOB Mersin Port, Türkiye – Incoterms® 2020
• FCA Seller's Factory Warehouse, [address], Gaziantep, Türkiye – Incoterms® 2020
• CIP Jebel Ali, UAE – Incoterms® 2020

If the year is not stated, which version applies may become a matter of dispute; if the parties wish, they may also incorporate older versions (e.g. Incoterms 2010) into the contract.

Sources

Last updated: 2026-10-01 · Prepared by ARTAĞAN Dijital Pazarlama İç ve Dış Ticaret A.Ş. This content is for general information; regulations and dimensions can change, so please verify with a current source before acting.