Incoterms 2020 — Rules, Risk & Cost
The eleven Incoterms® 2020 rules at a glance: who pays each cost, who insures, and the exact point where risk passes from seller to buyer.
Cost responsibility at a glance
Risk vs cost — the trap
The most expensive misunderstanding in trade is assuming risk and cost transfer at the same point. Under the C-terms (CFR, CIF, CPT, CIP) the seller pays freight all the way to the destination, but risk passes back at origin — the moment the goods are loaded or handed to the first carrier. Insure accordingly.
The D-terms (DAP, DPU, DDP) keep both cost and risk with the seller until the named destination. EXW sits at the opposite extreme, with the buyer taking on everything from the seller's door.
All eleven terms
Seller just makes the goods available at their own premises. Buyer does everything else, including export.
Seller clears for export and hands the goods to the buyer's carrier at a named place.
Seller delivers the goods alongside the vessel at the port of shipment.
Seller delivers the goods on board the vessel. Buyer pays the sea freight onward.
Seller pays the sea freight to the destination port, but risk passes once goods are on board at origin.
Like CFR, plus the seller buys minimum marine insurance to the destination port.
Seller pays carriage to the named destination; risk passes at the first carrier.
Like CPT, plus the seller buys all-risks insurance to the destination.
Seller delivers, ready for unloading, at the named destination. Buyer handles import.
Seller delivers AND unloads at the named destination. The only term where the seller unloads.
Seller delivers cleared for import with duties paid. Maximum seller obligation.
Frequently asked questions
What are Incoterms 2020?
Incoterms® 2020 are the International Chamber of Commerce's standard trade terms. Each rule defines who arranges and pays for transport, insurance and customs, and exactly where risk passes from seller to buyer.
What changed from Incoterms 2010 to 2020?
DAT was renamed and broadened to DPU (Delivered at Place Unloaded), CIP's required insurance rose to all-risks (ICC A) while CIF stayed at ICC C, and FCA gained an option for an on-board bill of lading.
Which Incoterm is best for containers?
For containerised cargo the ICC recommends FCA, CPT or CIP rather than FOB, CFR or CIF — the sea terms assume the seller bears risk until goods are on board, which doesn't match how containers are handed over at a terminal.
What is the difference between CIF and CIP?
Both have the seller pay freight and insurance to the destination. CIF is for sea freight and requires only minimum ICC (C) cover; CIP works for any mode and requires all-risks ICC (A) cover under Incoterms 2020.