Incoterms® 2020 quick reference
Illustration: original graphic by AYC International Logistics (CC0 1.0, free to reuse).
Incoterms® (International Commercial Terms), published by the International Chamber of Commerce (ICC), define how costs and risk split between buyer and seller. The current edition, Incoterms® 2020, effective 1 January 2020, has 11 rules. AYC explains the most common ones.
Read them by risk-transfer point
- EXW (Ex Works): buyer takes risk from seller’s factory
- FOB (Free On Board): risk moves once goods cross the ship’s rail
- CIF (Cost, Insurance, Freight): seller pays to destination port, but risk transfers at loading
- DDP (Delivered Duty Paid): seller delivers door, duty paid — most responsibility
The common confusions
| Term | Who pays freight | Who pays destination duty | Risk to buyer when |
|---|---|---|---|
| FOB | buyer | buyer | after loading |
| CIF | seller | buyer | after loading |
| DDP | seller | seller | after unloading |
Note: under CIF the seller buys insurance, but risk transfers at loading — cargo claims are still the buyer’s with the insurer.
How to choose
- Want peace of mind, fear customs → DDP (but higher unit price)
- Have your own customs ability → FOB / CIF more flexible, controllable price
Wrong term, wrong responsibility. Confirm before quoting. Contact AYC to verify.
Sources / References
- International Chamber of Commerce (ICC). Incoterms® 2020 official rules: in force since 1 Jan 2020, 11 rules in two groups — “any mode” (EXW/FCA/CPT/CIP/DAP/DPU/DDP) and “sea & inland waterway” (FAS/FOB/CFR/CIF). Retrieved 2026-09-14. https://2go.iccwbo.org/incoterms-2020-app/