The eleven rules that decide who pays, who carries the risk and who clears the goods — explained without the jargon.
Incoterms are a set of rules that carry considerable weight in international trade and cover every type of transport activity. Egeo Logistics attaches great importance to them in the services it provides, because they define the standards between seller and buyer that determine the responsibilities, the costs and the risks involved in moving goods.
Published by the International Chamber of Commerce and revised roughly every ten years, each rule is a three-letter code that answers four questions: where does delivery take place, when does risk pass from seller to buyer, who arranges and pays for the carriage, and who handles export and import formalities. Agreeing a rule takes one line in a contract; failing to agree one costs argument, delay and — in a claim — real money.
They do not cover the transfer of ownership, the price, the payment method or the law that governs your contract. Those belong in the sales agreement itself. An Incoterms rule is a shorthand for the logistics obligations, not a substitute for a contract.
“FCA” on its own is incomplete. Write the rule, the named place and the edition — for example FCA Ataşehir, İstanbul, Incoterms® 2020 — so that there is no doubt about where delivery occurs or which version applies.
Who does what under each rule. Scroll the table sideways on a narrow screen.
| Rule | Delivery & risk transfer | Export clearance | Main carriage | Insurance | Import clearance |
|---|---|---|---|---|---|
EXW Ex Works | At the seller’s premises, once the goods are placed at the buyer’s disposal | Buyer | Buyer | Neither party obliged | Buyer |
FCA Free Carrier | When the goods are handed to the carrier at the named place | Seller | Buyer | Neither party obliged | Buyer |
CPT Carriage Paid To | When the goods are handed to the first carrier | Seller | Seller | Neither party obliged | Buyer |
CIP Carriage and Insurance Paid To | When the goods are handed to the first carrier | Seller | Seller | Seller all-risks cover (ICC A) | Buyer |
DAP Delivered at Place | At the named destination, ready for unloading | Seller | Seller | Neither party obliged | Buyer |
DPU Delivered at Place Unloaded | At the named destination, after unloading | Seller | Seller | Neither party obliged | Buyer |
DDP Delivered Duty Paid | At the named destination, ready for unloading, duties paid | Seller | Seller | Neither party obliged | Seller |
| Rule | Delivery & risk transfer | Export clearance | Main carriage | Insurance | Import clearance |
|---|---|---|---|---|---|
FAS Free Alongside Ship | Alongside the vessel at the named port of shipment | Seller | Buyer | Neither party obliged | Buyer |
FOB Free on Board | When the goods are on board the vessel | Seller | Buyer | Neither party obliged | Buyer |
CFR Cost and Freight | When the goods are on board the vessel | Seller | Seller | Neither party obliged | Buyer |
CIF Cost, Insurance and Freight | When the goods are on board the vessel | Seller | Seller | Seller minimum cover (ICC C) | Buyer |
These seven rules work for road, rail, air, sea and multimodal movements — including containers handed over at an inland terminal.
The seller keeps the goods ready at the buyer’s disposal on its own premises. The buyer collects them, arranges export clearance and prepares the documents required for export. All costs and risks pass to the buyer at the moment of collection, which makes EXW the rule with the least obligation on the seller — and often an impractical one, because a foreign buyer cannot always lodge an export declaration in the seller’s country.
The seller delivers the goods, cleared for export, to the carrier nominated by the buyer at an agreed place. From that hand-over onward all costs and risks are the buyer’s, and the freight is paid by the buyer. FCA is usually the better choice where EXW was intended, because export clearance stays with the party that can actually perform it.
The seller contracts and pays for carriage to the named destination. Risk, however, passes much earlier — when the goods are handed to the first carrier — so the buyer carries the risk over a journey that the seller has arranged. That split is the single most misunderstood feature of the C rules.
CIP follows CPT for cost and risk, and adds an obligation on the seller to provide cargo insurance against loss or damage in transit. Under Incoterms 2020 that cover must be all-risks (Institute Cargo Clauses A) unless the parties agree otherwise, which is a material change from the 2010 edition.
The seller delivers the goods to the buyer at the agreed destination, on the arriving vehicle and ready to be unloaded. The buyer is responsible for unloading, for import clearance and for the duties and taxes that go with it.
DPU is the only rule that requires the seller to unload. The seller delivers once the goods have been unloaded at the named place, which may be a terminal or any other agreed point. Import clearance and duties remain with the buyer. This rule replaced DAT in the 2020 edition.
The seller prepares the goods and delivers them to the buyer after completing every customs formality, including import clearance and the payment of duties and taxes. All costs and risks sit with the seller until delivery. It is the most convenient rule for the buyer and the most exposed one for the seller.
Taking into account the rules specific to maritime and inland water transport, Egeo Logistics offers the service that fits the cargo — these four assume the goods are handed over at or on the vessel.
The seller’s delivery obligation ends when the goods are placed on the quay or on a barge alongside the vessel at the named port. From that point the buyer bears all costs and risks. FAS suits bulk and breakbulk cargo rather than containers, which are handed over at a terminal well before the ship’s side.
The seller loads the goods on board the vessel nominated by the buyer. Costs and risks pass to the buyer once the goods are on board. Like FAS, FOB is designed for conventional sea cargo; for containers, FCA reflects what actually happens at the terminal far more accurately.
The seller delivers the goods on board at the port of shipment and pays the freight to the named port of destination. Risk passes on loading, so the buyer carries it across a voyage the seller has contracted — the same asymmetry as CPT, applied to sea transport.
CIF follows CFR and adds an insurance obligation on the seller. Under Incoterms 2020 the minimum required cover is Institute Cargo Clauses C, which is considerably narrower than the all-risks cover required under CIP. Buyers who need broader protection should agree it expressly in the contract.
Egeo Logistics offers reliable and efficient transport in line with the Incoterms rules, which play a decisive role in international trade. If you would like further information or a service proposal, use the enquiry form on our contact page and we will work through the options with you.
Incoterms are standard trade terms published by the International Chamber of Commerce. Each three-letter rule defines where delivery takes place, when risk passes from seller to buyer, who arranges and pays for carriage and insurance, and who is responsible for export and import formalities. They do not cover the transfer of title, the price or the payment terms, so they sit alongside your sales contract rather than replacing it.
FCA, CPT and CIP are designed for any mode of transport, including containers handed over at an inland terminal. FOB, FAS, CFR and CIF assume the goods are loaded on a vessel, which for containers happens long after the seller has lost physical control. Using FCA instead of FOB for a container removes a gap in risk cover that many contracts never notice until there is a claim.
The most visible changes were the replacement of DAT by DPU, which now allows delivery at any place rather than only at a terminal, and the different insurance levels for CIP and CIF: CIP requires all-risks cover while CIF still requires only the minimum. FCA also gained an option for an on-board bill of lading, which helps sellers using letters of credit.
No. Incoterms govern delivery, risk, cost and formalities. The transfer of ownership is determined by the sales contract and the applicable law, and it can happen at a completely different moment from the transfer of risk.
Yes. We model the landed cost of the options you are considering and set out where the risk sits under each, so the decision is a commercial one rather than a habit inherited from an earlier contract.
Send us the transaction — the commodity, the route and what your counterparty has proposed — and we will model the cost and the risk under each realistic option.
