Which Incoterm should I use?
Answer a few questions about the shipment. The selector shows the Incoterms 2020 rule that matches, what the seller and the buyer each pay, and how to write it on your quotation and invoice.
The rule that fits
Answer the questions to see the Incoterms 2020 rule that fits your shipment.
EXW Ex Works
When to use it
EXW suits domestic sales, or buyers who have their own freight forwarder and customs agent in the seller's country. For most international sales FCA is the safer choice, because the seller then clears export, which a foreign buyer often cannot do.
How to write it
EXW + the exact pickup address + Incoterms 2020, for example: EXW Seller's warehouse, 12 Harbour Road, Incheon, Korea Incoterms 2020.
FCA Free Carrier
When to use it
FCA works for every mode of transport and is the ICC's recommended rule for container shipments, where goods are handed over at a terminal before loading. It gives the buyer control of the freight while leaving export formalities with the seller, who knows them best.
How to write it
FCA + the named place of delivery + Incoterms 2020, for example: FCA Seller's factory, Suwon, Korea Incoterms 2020 or FCA Busan New Port container yard Incoterms 2020.
CPT Carriage Paid To
When to use it
CPT suits containers, air freight and multimodal transport when the seller can get good freight rates but does not want to carry transit risk. It is the any-mode version of CFR.
How to write it
CPT + the named place of destination + Incoterms 2020, for example: CPT Lagos Incoterms 2020. It is wise to also state where delivery happens, such as "delivery at Incheon Airport".
Under CPT, CIP, CFR and CIF the seller pays the freight to the destination, but the risk passes to the buyer in the country of shipment. If the goods are damaged at sea, the buyer claims on the insurance; under CIF and CIP the seller must have arranged that insurance.
CIP Carriage and Insurance Paid To
When to use it
CIP suits manufactured goods sent by container, air or courier when the buyer wants insured delivery. It is the any-mode version of CIF, but with a higher level of insurance.
How to write it
CIP + the named place of destination + Incoterms 2020, for example: CIP Nairobi Incoterms 2020.
Under CPT, CIP, CFR and CIF the seller pays the freight to the destination, but the risk passes to the buyer in the country of shipment. If the goods are damaged at sea, the buyer claims on the insurance; under CIF and CIP the seller must have arranged that insurance.
DAP Delivered at Place
When to use it
DAP suits sellers who want to quote a delivered price while leaving import formalities to the buyer, who knows its own customs. It is common for trucking, courier and door-to-door container deliveries.
How to write it
DAP + the full destination address + Incoterms 2020, for example: DAP Buyer's warehouse, Plot 5, Industrial Area, Nairobi, Kenya Incoterms 2020.
DPU Delivered at Place Unloaded
When to use it
Use DPU when the seller can arrange unloading at the destination, for example through its own agent or with a carrier that unloads. It can be any place, not only a terminal.
How to write it
DPU + the exact place of unloading + Incoterms 2020, for example: DPU Buyer's warehouse dock 3, Jebel Ali Free Zone, Dubai Incoterms 2020.
DDP Delivered Duty Paid
When to use it
DDP suits sellers who know the import country well and can act as importer of record there, such as e-commerce sellers using a local agent. For most small exporters, DAP is safer.
How to write it
DDP + the full destination address + Incoterms 2020, for example: DDP Buyer's store, 45 Main Street, Toronto, Canada Incoterms 2020. To exclude import VAT, say so, for example "DDP ..., VAT unpaid".
FAS Free Alongside Ship
When to use it
FAS is for sea and inland waterway transport of bulk, break-bulk or heavy cargo that is loaded directly from the quay, such as grain, logs or machinery. It is not meant for containers.
How to write it
FAS + the named port of shipment + Incoterms 2020, for example: FAS Port of Santos Incoterms 2020.
FOB Free On Board
When to use it
FOB is meant for sea and inland waterway transport where goods are loaded directly on board, such as bulk and break-bulk cargo. It is widely used for containers too, but the ICC recommends FCA for container shipments.
How to write it
FOB + the named port of shipment + Incoterms 2020, for example: FOB Busan Incoterms 2020.
CFR Cost and Freight
When to use it
CFR suits sea shipments of bulk commodities and general cargo when the seller can get better freight rates than the buyer. For containers, CPT is the any-mode equivalent the ICC recommends.
How to write it
CFR + the named port of destination + Incoterms 2020, for example: CFR Chittagong Incoterms 2020.
Under CPT, CIP, CFR and CIF the seller pays the freight to the destination, but the risk passes to the buyer in the country of shipment. If the goods are damaged at sea, the buyer claims on the insurance; under CIF and CIP the seller must have arranged that insurance.
CIF Cost, Insurance and Freight
When to use it
CIF is common for commodities and for sales paid by letter of credit, where the bank wants to see an insurance document. It is for sea and inland waterway only; for containers the ICC recommends CIP.
How to write it
CIF + the named port of destination + Incoterms 2020, for example: CIF Mombasa Incoterms 2020.
Under CPT, CIP, CFR and CIF the seller pays the freight to the destination, but the risk passes to the buyer in the country of shipment. If the goods are damaged at sea, the buyer claims on the insurance; under CIF and CIP the seller must have arranged that insurance.
Use EXW in the invoice generator →Full guide to EXW
Use FCA in the invoice generator →Full guide to FCA
Use CPT in the invoice generator →Full guide to CPT
Use CIP in the invoice generator →Full guide to CIP
Use DAP in the invoice generator →Full guide to DAP
Use DPU in the invoice generator →Full guide to DPU
Use DDP in the invoice generator →Full guide to DDP
Use FAS in the invoice generator →Full guide to FAS
Use FOB in the invoice generator →Full guide to FOB
Guides on this topic
How the selector decides
Two questions decide most of it: who pays the main freight, and where the risk passes. If the buyer pays the freight, the rule is EXW, FCA, FAS or FOB, depending on where the seller hands over the goods. If the seller pays the freight but the risk passes in the export country, it is a C rule (CPT, CIP, CFR or CIF). If the seller carries the risk to the destination, it is a D rule (DAP, DPU or DDP).
Sea-only rules and any-mode rules
FAS, FOB, CFR and CIF are only for sea and inland waterway transport where the goods are loaded directly onto the ship. For containers, air, road, rail or several modes, use EXW, FCA, CPT, CIP, DAP, DPU or DDP.
What an Incoterms rule does not cover
An Incoterms rule sets delivery, risk, costs and customs clearance between the seller and the buyer. It does not decide when ownership passes, the payment terms or the price, and it does not replace the sales contract. Always write the named place and "Incoterms 2020" after the rule.
Common questions
Which Incoterm is best for a first export?
It depends on who can arrange the freight and the customs formalities. If the buyer has a forwarder, FCA is usually simpler than EXW because the seller clears export. If you arrange the freight, CPT, CIP or DAP leave import clearance with the buyer. Use DDP only if you can act as the importer in the buyer's country.
Can I use FOB for container shipments?
It is common in practice, but the ICC recommends FCA for containers: under FOB the risk passes only when the container is loaded on board, although the seller has usually handed it over at the terminal days earlier. With FCA the risk passes at that handover.
Is the named place required?
Yes. Every rule needs a named place or port, for example FCA Busan CY Incoterms 2020 or DAP Hamburg warehouse Incoterms 2020, because the place decides where delivery and risk pass.
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