Incoterms for international shipping

Understanding incoterms is essential when shipping goods internationally. These globally recognised rules define who is responsible for each step of the journey. They clearly outline responsibilities for transport, insurance, customs clearance and the point at which risk transfers between buyer and seller. Choosing the right incoterm helps prevent delays and unexpected costs.

Most common incoterms

Incoterms simplify this process by clearly defining who is responsible for each part of the shipment. Below are the most commonly used Incoterms, explained in plain language so you can quickly see which works best for your business.

EXW - Ex Works

The seller simply makes the goods available at their premises, and the buyer takes full control from there—organising pickup, loading, export clearance, international freight, insurance, and import formalities. It offers maximum control for the buyer, but also means managing the entire logistics process.

FOB - Free On Board

The seller handles export prep and loads the goods onto the vessel at the origin port. Once the goods are on board, responsibility shifts to the buyer. From there, the buyer takes care of: ocean freight, cargo insurance, import customs clearance, final delivery

DAP - Delivery at Place

The seller arranges and pays for transport to a specified destination, such as the buyer’s warehouse, distribution centre, or project site. The buyer is responsible for: import customs clearance and duties and taxes

DDP - Delivered Duty Paid

The seller handles everything - export clearance, international transport, import customs, duties, and taxes - delivering the goods ready for unloading at the buyer’s door. Because some countries restrict the seller from acting as the importer of record, DAP or DPU may be better alternatives in those cases.

CIF - Cost, Insurance & Freight

The seller pays for ocean freight and basic insurance to the destination port, but risk transfers to the buyer once the goods are loaded at origin. It’s a convenient option for buyers who want the seller to handle international shipping while they manage import clearance and final delivery.

CFR - Cost & Freight

The seller pays for transport to the destination port, but risk transfers to the buyer once the goods are loaded at origin. The buyer then handles insurance, import clearance, duties, taxes, and final delivery. CFR suits buyers who want the seller to manage main carriage while they oversee the import process and delivery.

Incoterms comparison table

Shipping internationally can be complex, with different responsibilities for freight, insurance, customs, and delivery costs. Our incoterms comparison table makes it easy to see at a glance who is responsible for each part of the shipment, the associated costs, and the best use cases for each term.

This table helps you quickly identify the right Incoterm for your shipment.

Incoterms quick reference guide

INCO Terms get updated periodically. The full current list of INCO Terms (2020) is available for purchase on the ICC website. Download Mainfreight's Incoterms 2020 Quick Reference Guide here.

Download : Incoterms

Incoterms

Incoterms help break down language barriers between international exporters and importers. This simple guide helps you to understand Incoterms.

Incoterms - For All Modes of Transport

EXW - Ex Works (...named place of delivery)

Under EXW (Ex Works), the seller simply makes the goods available at their premises, such as a factory or warehouse. From that point forward, the buyer takes full responsibility for the shipment. This means the buyer must organise:

Collection of the goods
Loading and transport
Export clearance
International freight
Insurance and import procedures

EXW gives buyers maximum control over their international shipping, but it also means managing the entire logistics process. For businesses new to importing, this can be more complex without support from a freight forwarder.

FCA - Free Carrier (...named place of delivery)

Delivery is made either when goods are (1) loaded on the means of transport provided by the buyer at the seller's stated location; or (2) when placed at the disposal of the buyer's carrier, cleared for export by the seller. From either point of delivery, the Buyer bears the costs and risks of moving goods to destination. The named place/address is required when FCA is used.

CPT - Carriage Paid To (...named place of destination)

The Seller delivers and transfers risk of loss or damage by handing over goods to the carrier chosen by the seller, cleared for export, who pays for moving the goods to the named place of destination. From the time the goods are transferred to the first carrier, the Buyer bears the risk of loss or damage.

CIP - Carriage And Insurance Paid To (...named place of destination)

DPU - Delivered At Named Place, Unloaded (named address/place of destination)

The Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the Buyer's disposal at place of destination. The Seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination. DPU is the only Incoterms where the Seller must pay for unloading at destination. As seller is responsible for unloading the goods at destination it is highly recommended to be as specific as possible as to the named address/place of destination as all costs thru to unloading are for the seller's account.

DAP - Delivered At Place (...named address/place of destination)

The Seller delivers when the goods are placed at the Buyer's disposal on the arriving means of transport ready for unloading at the named place of destination or at the agreed point within that place, if any such point is agreed. The Seller bears all risks involved in bringing the goods to the named place. Delivery & Arrival at destination are the same.

DDP - Delivered Duty Paid (...named address/place of destination)

The Seller delivers the goods to the buyer when the goods are placed at the disposal of the buyer, cleared for import, on the arriving means of transport, ready for unloading, at the named place of destination. The Seller bears all costs and risks of moving the goods to destination, including the payment of Customs duties and taxes. There are limitations to DDP, as Customs formalities in the importing country may not readily allow the seller to be the legal importer of record; DAP or DPU are suggested incoterms in such cases.

Ocean Transportation Only

FAS - Free Alongside Ship (...named wharf/seaport)

The Seller delivers the goods to the buyer when the goods are cleared for export then placed alongside the ship nominated by the buyer at the named port of shipment. From that point, the Buyer bears all costs and risks of loss or damage.

FOB - Free On Board (...named wharf/seaport of shipment)

With FOB, the seller handles export prep and loads the goods onto the vessel at the origin port. Once the goods are on board, responsibility shifts to the buyer. From there, the buyer takes care of:

Ocean freight
Cargo insurance
Import customs clearance
Final delivery

CFR - Cost And Freight (...named wharf/seaport of destination)

The Seller delivers the goods to the buyer on board the vessel, cleared for export to the named port of destination. The Buyer bears all risks of loss or damage once on board. Where more than one mode of transport is to be used, such as when goods are handed over to a carrier at a container terminal, it is highly recommended to use CPT instead.

CIF - Cost Insurance And Freight (...named wharf/seaport of destination)

The Seller delivers the goods to the buyer on board the vessel, cleared for export to the name port of destination. The Buyer bears all risks of loss or damage once on board. The Seller, however, purchases the cargo insurance to the named wharf/seaport of destination. Where more than one mode of transport is to be used, such as when goods are handed over to a carrier at a container terminal, it is highly recommended to use CPT instead.

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Frequently asked questions - Incoterms

Here you’ll find answers to common questions about Incoterms and how they apply to your shipments.

What are Incoterms in international shipping?

Incoterms are internationally recognised trade terms that define the responsibilities of buyers and sellers in global trade. They clarify who is responsible for transport, insurance, customs clearance, and risk at each stage of the shipping process. Incoterms are published by the International Chamber of Commerce and are widely used in international contracts.

What are the most commonly used Incoterms?

The most commonly used Incoterms include EXW (Ex Works), FOB (Free On Board), CIF (Cost, Insurance and Freight), FCA (Free Carrier), DAP (Delivered at Place), and DDP (Delivered Duty Paid). Each term determines how shipping costs and risks are shared between the buyer and seller.

Which Incoterm is best for importers?

Many importers prefer FOB or FCA because these terms allow them to control international freight costs and choose their own freight forwarder. However, some businesses prefer DAP or DDP when they want the supplier to handle most of the shipping process.