Incoterms are the International Chamber of Commerce’s standardised trade terms defining how buyer and seller split costs, risk, and tasks in a sale of goods: who arranges carriage and insurance, where risk transfers, and who handles export and import clearance. The current edition, Incoterms 2020, has eleven rules.
Each three-letter rule answers the same questions differently: EXW puts nearly everything on the buyer, DDP nearly everything on the seller, with FCA, FOB, CFR, CIF, and DAP spanning the middle. Four rules (FAS, FOB, CFR, CIF) are designed for sea transport; the rest work for any mode.
Incoterms do not transfer title, fix the payment method, or override the sales contract; they allocate logistics cost and risk. The rule plus a precise named place, “FCA Shanghai CY, Incoterms 2020”, is the complete usage; a rule without a place is half a term.
The Incoterm decides which tracked events are yours to worry about: under FOB the seller’s risk ends at loading, so the load event closes their exposure, while a DAP buyer cares about the whole chain to delivery. Mapping your terms to milestones in TrackingMCP tells each side which alerts matter, from gate-in to final delivery.
Incoterms allocate cost and risk between buyer and seller, but the sales contract controls. Confirm the rule, the named place, and the Incoterms edition in writing, and take advice for anything contentious.
Incoterms are the International Chamber of Commerce’s standardised trade terms defining how buyer and seller split costs, risk, and tasks in a sale of goods: who arranges carriage and insurance, where risk transfers, and who handles export and import clearance. The current edition, Incoterms 2020, has eleven rules.
The ICC advises the any-mode rules for containerised cargo, notably FCA instead of FOB and CIP instead of CIF, because containers are handed over at terminals before they are ever on board. Practice lags the advice.
No. Transfer of title is a sales-contract and applicable-law question. Incoterms govern cost, risk, and task allocation in the delivery chain.
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More in Incoterms, rates & risk: EXW (Ex Works) · FCA (Free Carrier) · FOB (Free On Board) · CFR (Cost and Freight) · CIF (Cost, Insurance and Freight) · DAP (Delivered at Place) · DDP (Delivered Duty Paid) · Spot rate vs contract rate · Force majeure · General average · Letter of indemnity (LOI) · Browse all 106 terms →