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What are Incoterms® 2020?
Incoterms® 2020 is a set of standardised trade terms that define how responsibilities are split between buyer and seller — covering transport, costs and the transfer of risk when goods move from A to B.
They were developed by the ICC (International Chamber of Commerce) and are an essential framework for anyone involved in sending or receiving goods internationally.
Finding out which rules apply to which mode of transport can be tricky, though — so we've put together a clear overview to make it easier.
Download the PDF below to always have the Incoterms® 2020 overview close at hand.
Why are Incoterms® important?
Incoterms® help you avoid misunderstandings and legal disputes in international trade. They establish clear rules on:
- When risk transfers from seller to buyer
- Who is responsible for freight costs, customs duties and insurance — and at what point
For both buyers and sellers, this provides a shared framework that makes international transactions far easier to manage.
It's also worth noting that when you — as buyer or seller — bear the risk, it's important to have the goods insured. Carriers carry only limited liability for the goods they transport.
Note: Many companies have standard Incoterms® they work with by default. It's worth checking whether your organisation has any fixed rules in this area.
Free Incoterms® 2020 overview
We've put together a visual overview showing the full responsibility and risk distribution for all Incoterms® 2020. Download it for free below — and save it so you always have it to hand.
Incoterms® 2020 is an updated version of Incoterms® 2010. We recommend using the latest version, such as the overview below.
The most commonly used Incoterms®
EXW (Ex Works)
EXW is one of the most widely used Incoterms®, well-suited to situations where the buyer wants full control over the logistics.
The seller is responsible for:
- Making the goods available at their own premises (e.g. a factory or warehouse). That's where the seller's responsibility ends.
The buyer is responsible for:
- All costs and risks from the point of collection through to delivery at the destination — including transport, insurance and customs duties.
Read more about EXW Incoterm®.
DAP (Delivered At Place)
DAP is another widely used Incoterm®, commonly chosen when the seller is well-placed to arrange transport to the buyer's location.
The seller is responsible for:
- Arranging transport and delivering the goods to an agreed destination — not including unloading.
The buyer is responsible for:
- Customs clearance and payment of import duties upon arrival. The seller bears all risk up until the point of delivery.
Read more about DAP Incoterm®.
FOB (Free on Board)
FOB is used exclusively for sea freight and is a good fit for situations where the buyer wants control from the port of shipment onwards.
The seller is responsible for:
- All costs and risks until the goods are loaded on board the vessel at the port of shipment.
The buyer is responsible for:
- All risk and costs from the moment the goods are on board the ship.
Read more about FOB Incoterm®.
How to choose the right Incoterm®
When deciding which Incoterm® to use, consider the following:
- Mode of transport — Some Incoterms® only apply to specific modes of transport (sea, air, road or rail). Make sure the one you choose is compatible.
- Insurance requirements — Some Incoterms® (e.g. CIF and CIP) require the seller to arrange insurance. Choose one that fits your insurance and risk strategy.
- Experience levels — Consider how experienced both parties are in international trade. If one party has less experience, it may make sense for the other to take on more responsibility.
- Access to logistics partners — If one party doesn't have access to reliable carriers, it may be worth choosing an Incoterm® where the other party handles transport.
- Special cargo requirements — For goods with specific needs — such as temperature-sensitive products — choose an Incoterm® that gives you control over transport conditions.
- Multimodal transport — If your shipment involves more than one mode of transport (e.g. sea and road), make sure your Incoterm® covers all legs of the journey (e.g. FCA or CIP).
Taking all of these into account will help you choose the Incoterm® that best distributes responsibility, risk and cost between you and your trading partner — and minimise the chances of delays, misunderstandings or errors along the way.
We hope you find our Incoterms® overview useful. If you have any questions, don't hesitate to reach out.
Thank you for reading.
Frequently asked questions about Incoterms®
What are Incoterms® 2020?
Incoterms® 2020 are the latest rules published by the International Chamber of Commerce (ICC). They define who is responsible for freight costs, insurance and risk when goods are traded across borders.
What are DDP Incoterms® 2020?
DDP står for Delivered Duty Paid — the most seller-heavy of all Incoterms®. The seller takes on full responsibility for transport, delivery and all associated costs, including customs duties and VAT, right to the buyer's specified destination. Read more about DDP Incoterm®.
What is FCA Incoterm® 2020?
FCA stands for Free Carrier. The seller delivers the goods to a carrier nominated by the buyer. Once handed over, responsibility transfers to the buyer. FCA can be used across all modes of transport. Read more about FCA Incoterm®.
What is the difference between Incoterms® 2010 and 2020?
Incoterms® 2020 is an updated version of the 2010 rules. Both versions remain valid, but the 2020 rules are better suited to the realities of modern international trade.
Is there an Incoterms® 2024?
No — there is no Incoterms® 2024. Incoterms® are typically updated every ten years, so the next version isn't expected until around 2030. Incoterms® 2020 remains the current standard.
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