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Pick the right Incoterms® 2020 rule for your shipment, then see exactly where costs and risk pass from seller to buyer - leg by leg.
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Cost & risk map - select a term
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Ask Us on WhatsAppWhat are Incoterms?
Incoterms® (International Commercial Terms) are 11 standardized trade rules published by the International Chamber of Commerce. Each three-letter term defines who - seller or buyer - pays for each leg of the journey, who arranges customs clearance, and the exact point where risk of loss or damage transfers. They appear on every commercial invoice and purchase order in international trade. For the full background, read our guide: What are Incoterms? A plain-English explainer.
All 11 Incoterms 2020 at a glance
| Term | Name | Mode | Seller pays freight? | Risk transfers |
|---|---|---|---|---|
| EXW | Ex Works | Any | No | Seller's premises |
| FCA | Free Carrier | Any | No | Handover to buyer's carrier |
| FAS | Free Alongside Ship | Sea only | No | Alongside vessel at origin port |
| FOB | Free On Board | Sea only | No | On board vessel at origin port |
| CFR | Cost and Freight | Sea only | Yes | On board vessel at origin port |
| CIF | Cost, Insurance & Freight | Sea only | Yes + insurance | On board vessel at origin port |
| CPT | Carriage Paid To | Any | Yes | Handover to first carrier |
| CIP | Carriage & Insurance Paid To | Any | Yes + insurance | Handover to first carrier |
| DAP | Delivered At Place | Any | Yes | Named destination, ready to unload |
| DPU | Delivered at Place Unloaded | Any | Yes + unloading | Named destination, after unloading |
| DDP | Delivered Duty Paid | Any | Yes + import duty | Named destination, ready to unload |
The C-terms trap: who pays vs who risks
The most common Incoterms mistake is assuming that whoever pays the freight also carries the risk. Under CFR, CIF, CPT and CIP, the seller pays for carriage to destination, but risk transfers to the buyer at origin - when cargo goes on board (CFR/CIF) or is handed to the first carrier (CPT/CIP). If the ship sinks mid-voyage on CFR terms, it's the buyer's loss. That's exactly what the risk flag in the chart above shows.
Why FOB and CIF are wrong for containers
FAS, FOB, CFR and CIF are sea-only terms written for cargo loaded directly onto a vessel. Containerized cargo is handed over at the container yard days before loading, creating a gap where neither party clearly carries the risk. The ICC's guidance: for containers use FCA instead of FOB, CPT instead of CFR, and CIP instead of CIF. In practice, much of India's container trade still runs on FOB/CIF - it usually works, but it's worth knowing where you're exposed.
Our advice for Indian importers and exporters
If you're importing into Chennai or Bengaluru, buying on FOB or FCA and booking freight through your own forwarder usually gets you better rates and protects you from inflated destination charges that sometimes ride along with CIF offers. If you're exporting, FOB keeps your obligations simple and ends your risk at the port. Whatever the term, you'll still need import customs clearance or export clearance handled properly - that's what we do. Message us on WhatsApp for help with your shipment terms.
Incoterms® is a registered trademark of the International Chamber of Commerce. This tool is a simplified planning guide, not legal advice - always state the term, named place and "Incoterms 2020" on your contract.