Understanding Incoterms 2020

Incoterms (International Commercial Terms) are a set of 11 standardized trade terms published by the International Chamber of Commerce (ICC). They define who pays for shipping, insurance, and customs duties, and at what point risk transfers from seller to buyer.

Why They Matter

Choosing the wrong Incoterm can leave you responsible for costs you did not budget for or expose you to liability during transit. Every tender and quotation on Faktorist includes an Incoterms field so both parties are aligned from the start.

The 11 Incoterms at a Glance

Any mode of transport: EXW (Ex Works), FCA (Free Carrier), CPT (Carriage Paid To), CIP (Carriage and Insurance Paid To), DAP (Delivered at Place), DPU (Delivered at Place Unloaded), DDP (Delivered Duty Paid).

Sea and inland waterway only: FAS (Free Alongside Ship), FOB (Free on Board), CFR (Cost and Freight), CIF (Cost Insurance and Freight).

How to Choose

If you are new to exporting, FOB or FCA are safe starting points — you handle domestic logistics, and the buyer arranges international freight. If the buyer wants a landed cost, consider CIF or DDP.