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Transport and Transportation

What to Understand About Incoterms 2020

Global trades are governed by the Intercoms. The new Intercom 2020 was announced by the International Chamber of Commerce (ICC) and went into force on January 1, 2020. The ICC updates the Incoterms every 10 years, and all buyers and sellers in international trade are expected to obey them.

Before we see the variations in Incoterms 2020, let’s have a glance at what Incoterms are and what they include.


Incoterms are the trade provisions that both the selling and buying parties must agree to during international transactions. Under Intercoms, all expenses, risks, and businesses associated with international commerce are outlined. The Incoterms are crucial for both vendors and purchasers to grasp. 

Topics included under Intercoms

Intercoms define all of the buyers’ and retailers’ key duties. Here are a few key points to consider when it comes to intercoms:

  • Time for delivery
  • Insurance risks associated with the transfer
  • Import and export approval
  • Costs associated with delivery
  • Transportation mode

Eleven Terms to know on Incoterms 2020

  • Free on Board (FOB)

The retailer is accountable for placing the commodities onto the container at the named port. Any loss or damage, once it has been loaded, is the buyer’s liability.

  • Ex-Warehouse (EXW)

The vendor delivers the items at the buyer’s disposal under this word. The vendor is not responsible for loading things into vehicles or securing export clearance under EXW.

  • Cost and Freight (CFR)

Before the goods are loaded at the port, all the costs to reach the port are to be borne by the sellers. 

  • Free Carrier (FCA)

Seller hands over the goods to a carrier or a third party nominated by the buyer. Both parties should decide a specific point beyond which all risks and damages are the buyer’s responsibility.

  • Free Alongside Ship (FAS)

The buyer specifies a location for the vendor to place all products near the vessel. After this point risks pass on to buyers. 

  • Carriage paid to (CPT)

The buyer selects a carrier; the seller pays the carrier to transfer the goods to a designated spot. 

  • Delivery Duty Paid (DDP)

The seller delivers goods after import clearance and upon arrival at the destination port. No party is obliged to insure the package. In this term, the seller bears the most responsibility.

  • Delivered at Place (DAP)

A mid-point destination is decided and the seller delivers goods to that point. The term is used when multiple transportations are in the picture. 

  • Delivered at Place Unloaded (DPU)

The transfer is finished once the seller unloads the goods at a designated spot. Prior to that, the vendor is responsible for all charges. It is a replacement of DAT in Incoterms 2010. 

  • Cost, Insurance and Freight (CIF)

Goods are delivered by the seller once they are packed and ready for shipment. The buyer is responsible for the fees after boarding. However, mediation is allowed between contractors.

  • Carriage and Insurance paid to (CIP)

Similar to CPT, but with additional insurance coverage for the buyer in case of any damage to goods during the carriage.