The 11 rules in one table
For each rule: where the risk passes from seller to buyer, who pays the main carriage, who must insure, and who handles export and import formalities. For import into the EU, "import" means the declaration, the import duty and the import VAT.
| Rule | Risk passes | Main carriage paid by | Insurance | Export | Import |
|---|---|---|---|---|---|
| Any mode of transport | |||||
| EXW | When the goods are ready at the seller's premises, not loaded | buyer | no obligation | buyer | buyer |
| FCA | On handover to the buyer's carrier at the named place | buyer | no obligation | seller | buyer |
| CPT | On handover to the first carrier, at the place of dispatch | seller | no obligation | seller | buyer |
| CIP | On handover to the first carrier, at the place of dispatch | seller | seller, broad cover (ICC A) | seller | buyer |
| DAP | At the named destination, ready for unloading | seller | no obligation | seller | buyer |
| DPU | At the named destination, unloaded | seller | no obligation | seller | buyer |
| DDP | At the named destination, cleared for import and ready for unloading | seller | no obligation | seller | seller (see note) |
| Sea and inland waterway only | |||||
| FAS | Alongside the ship, in the port of shipment | buyer | no obligation | seller | buyer |
| FOB | On board the ship, in the port of shipment | buyer | no obligation | seller | buyer |
| CFR | On board the ship, in the port of shipment | seller, to the port of destination | no obligation | seller | buyer |
| CIF | On board the ship, in the port of shipment | seller, to the port of destination | seller, minimum cover (ICC C) | seller | buyer |
Jump to a rule: EXW, FCA, CPT, CIP, DAP, DPU, DDP, FAS, FOB, CFR, CIF.
Paying is not the same as carrying the risk. Under CPT, CIP, CFR and CIF the seller pays the carriage to the destination, but the risk passes to the buyer at dispatch. If the cargo is damaged on the way, that is your loss. Under CFR and CPT you have to think about insurance yourself.
The 11 Incoterms one by one
Each rule in a few lines. The table above has the same information side by side. The names are those of Incoterms 2020.
EXW (Ex Works): the buyer does everything
The risk passes when the goods are ready at the seller's premises, not loaded. The buyer loads and arranges export, carriage and import, and nobody has to insure. If you expect you cannot handle export from the country of dispatch yourself, the ICC recommends FCA.
FCA (Free Carrier): the seller hands over to your carrier
Under FCA the seller handles export and the risk passes when the goods are handed to the buyer's carrier at the named place, for example the seller's premises, a warehouse or a terminal. The buyer pays the main carriage and handles import, and nobody has to insure. FCA works for any mode of transport. The ICC recommends it for containers, because the seller usually hands the container to the terminal, often days before the ship leaves.
CPT (Carriage Paid To): the seller pays the carriage
Under CPT the seller handles export and pays the main carriage to the named destination, but the risk passes earlier, when the goods are handed to the first carrier at the place of dispatch. Nobody has to insure, so think about insurance yourself. The buyer handles import. CPT works for any mode of transport.
CIP (Carriage and Insurance Paid To): CPT plus insurance
CIP works like CPT: the seller pays the carriage to the named destination, and the risk passes to the buyer when the goods are handed to the first carrier. In addition the seller must insure with the broad cover of clause (A) of the Institute Cargo Clauses, for at least 110% of the contract price. The buyer handles import.
DAP (Delivered at Place): the seller delivers at the destination
Under DAP the seller handles export, pays the carriage and carries the risk up to the named place of destination, where the goods are ready for unloading. The buyer handles import and pays the duty and VAT. Nobody has to insure.
DPU (Delivered at Place Unloaded): DAP, but unloaded
DPU is the same as DAP, except that the seller also unloads the goods at the named place of destination. The buyer handles import and pays the duty and VAT. DPU is the name since 2020 for what used to be DAT.
DDP (Delivered Duty Paid): the seller also handles import
Under DDP the seller delivers at the named destination, cleared for import and ready for unloading, and says it will handle import and pay the duty and VAT. According to the ICC that is not always possible for a foreign seller, and in practice the declaration is often made in your name anyway. Read the note on DDP before you accept it.
FAS (Free Alongside Ship): sea and inland waterway only
Under FAS the seller handles export and the risk passes when the goods are alongside the ship in the port of shipment. From then on the buyer pays the main carriage, handles import and carries the risk. Nobody has to insure.
FOB (Free On Board): sea and inland waterway only
Under FOB the seller handles export and the risk passes when the goods are on board the ship in the port of shipment. The buyer pays the main carriage and handles import, and nobody has to insure. FOB is not meant for air freight. In practice FOB is still widely used for containers, although the ICC recommends FCA there.
CFR (Cost and Freight): sea and inland waterway only
Under CFR the seller pays the carriage to the port of destination, but the risk passes to the buyer as soon as the goods are on board in the port of shipment. Nobody has to insure, so think about insurance yourself. Costs in the port of destination, such as unloading and terminal handling, are usually for the buyer, unless the seller's contract of carriage covers them.
CIF (Cost, Insurance and Freight): sea and inland waterway only
CIF works like CFR: the seller pays the carriage to the port of destination, and the risk passes to the buyer when the goods are on board in the port of shipment. In addition the seller must insure with at least the cover of clause (C) of the Institute Cargo Clauses, the limited cover, for at least 110% of the contract price. The buyer handles import. CIF is not for air freight or other modes of transport.
Where the rules differ: per group
EXW: the buyer does everything. Ex Works. The seller makes the goods available at its premises and does not even have to load them. The buyer loads and arranges pick-up, export, carriage and import. An EU buyer usually cannot handle export from, for example, China itself. In practice the supplier then handles export anyway, outside the agreement. If you expect you cannot handle export yourself, the ICC recommends FCA. Under FCA the seller handles export.
FCA, FAS and FOB: the seller delivers in its own country. The seller handles export and delivers to the carrier the buyer chooses: under FCA at an agreed place (its own premises, a warehouse or a terminal), under FAS alongside the ship, under FOB on board. From then on the buyer pays and carries the risk. FAS and FOB are meant for sea and inland waterway. With containers, the seller usually hands the container to the terminal, often days before the ship leaves. That is why the ICC recommends FCA for containers, and CPT or CIP if the seller pays the carriage. In practice FOB is still widely used for containers.
CPT, CIP, CFR and CIF: the seller pays the carriage. The seller arranges and pays carriage to the named destination, but the risk passes as soon as the goods are handed to the first carrier at the place of shipment (CPT, CIP) or are on board (CFR, CIF). Only under CIF and CIP must the seller also insure. Costs in the port of destination, such as unloading and terminal handling, are usually for the buyer, unless the seller's contract of carriage covers them.
DAP, DPU and DDP: the seller delivers at the destination. The seller carries the risk up to the named place of destination. Under DAP the goods are there ready for unloading, under DPU the seller also unloads them. Under DAP and DPU the buyer handles import and pays the duty and VAT. Under DDP the seller also handles import.
Insurance: only required under CIF and CIP
Under CIF the seller must take out at least the cover of the Institute Cargo Clauses (C). That is the limited cover. The parties may agree broader cover. Under CIP it must be the broad cover of clause (A). Under both rules the amount insured is at least the contract price plus 10%, so 110%. What a policy actually covers is in the policy itself. Ask for it.
Under the other nine rules the Incoterm puts no insurance obligation on anyone. Whoever carries the risk is wise to insure anyway.
The Incoterm and your customs value
Import duty is calculated on the customs value. That is the price you pay for the goods, plus among other things the cost of transport, insurance, loading and handling up to the place where they enter the EU (UCC Articles 70 and 71). For sea freight that is the first port in the EU (Implementing Regulation 2015/2447, Article 137). Selling commissions, packing and royalties you pay as a condition of the sale are added too, if they are not in the price. The Incoterm decides what is already in the invoice price and what you must add or may deduct:
| Incoterm on the invoice | For the customs value |
|---|---|
| EXW | Add all transport, loading and insurance costs up to the place of entry into the EU, including those in the country of dispatch. |
| FCA, FAS, FOB | Add the freight up to the place of entry into the EU, and the insurance if you take it out. They are usually on your forwarder's freight invoice, not on the commercial invoice. |
| CFR, CPT | Freight is in the price. Add insurance if you take it out yourself. |
| CIF, CIP | Freight and insurance are in the price. If the destination lies beyond the place of entry, the transport after that does not count. Have that amount shown separately, or it is hard to prove. |
| DAP, DPU | Transport after entry into the EU does not count. Have that amount shown separately. |
| DDP | Transport after entry into the EU, import duty and import VAT do not count (UCC Article 72). Have those amounts shown separately. |
A note on DDP
Under DDP the seller says it will handle import and pay the duty and VAT. According to the ICC that is not always possible for a foreign seller. Whoever lodges a declaration in the EU must in principle be established in the EU (UCC Article 170). In practice the seller therefore uses a broker acting as indirect representative, declaring in its own name (UCC Article 18). Who must pay the import VAT is decided by the country of import (VAT Directive Article 201). If the seller is the importer, it then makes a supply in the country of import (VAT Directive Article 32). In practice it needs a VAT registration there for that. See also who is the importer.
Often it works differently. The declaration is made in your name with your EORI number, and the supplier only pays the costs. Then you are the declarant and the debtor of the customs debt (UCC Articles 5 and 77). If the HS code or the value is wrong, the claim comes to you, even though the invoice said DDP.
So with DDP, ask in advance in whose name the declaration is made, who pays the import VAT and whether you get to see the declaration.
Check the Incoterm on your invoice
The Incoterm decides which costs are still coming and what counts in the customs value. So check before the goods are shipped:
- Is there an Incoterm on the invoice, with a place after it? "FOB" alone does not say which port.
- Is the year stated, for example "Incoterms 2020"? The versions differ. DAT has been called DPU since 2020, for example, and the required cover under CIP became broader.
- Does the Incoterm match what you agreed with the supplier and the mode of transport? FAS, FOB, CFR and CIF are for sea and inland waterway only, so FOB or CIF with air freight is wrong.
- Do freight and insurance match the freight invoice, the transport document and the insurance certificate?
Have your shipment checked
Import8 reads your invoice, packing list and transport document and shows what is wrong or missing, including the Incoterm. Each finding comes with its source, and you get a message you can send to your supplier as it is. A free account has 5 credits, no credit card needed.
Check your shipment →Frequently asked questions about Incoterms
What is an Incoterm?
An Incoterm is an agreement between buyer and seller on who arranges transport, who carries the risk and who handles export and import. Incoterms 2020 has 11 rules. It is on the invoice, with a place after it, for example "FCA Shenzhen".
What does FCA mean in Incoterms?
FCA (Free Carrier) means the seller handles export and hands the goods to the carrier the buyer chooses, at an agreed place. From then on the buyer pays the main carriage and carries the risk. Nobody has to insure. FCA works for any mode of transport and is what the ICC recommends for containers.
What is the difference between FCA and FOB?
Under FCA the seller hands the goods to the buyer's carrier at an agreed place, and it works for any mode of transport. Under FOB the goods are delivered on board the ship in the port of shipment, and FOB is for sea and inland waterway only. For containers the ICC recommends FCA, because the seller usually hands the container to the terminal, often days before the ship leaves.
What does CIF mean and who insures?
Under CIF (Cost, Insurance and Freight) the seller pays the carriage and the insurance to the port of destination, but the risk passes to the buyer when the goods are on board in the port of shipment. The seller must take out at least the cover of the Institute Cargo Clauses (C), the limited cover. CIF is for sea and inland waterway only.
What is the difference between CIF and CIP?
CIF is for sea and inland waterway only, the risk passes when the goods are on board, and the seller must insure at least with clause (C), the limited cover. CIP works for any mode of transport, the risk passes when the goods are handed to the first carrier, and the seller must insure with the broad cover of clause (A). Under both the amount insured is at least 110% of the contract price.
Under which Incoterms does the seller pay the freight?
Under CPT, CIP, CFR, CIF, DAP, DPU and DDP. Paying is not the same as carrying the risk: under CPT, CIP, CFR and CIF the risk passes to the buyer at dispatch, so if the cargo is damaged on the way, that is the buyer's loss.
Who pays import duty and import VAT under DAP and DDP?
Under DAP and DPU the buyer handles import and pays the duty and VAT. Under DDP the seller says it will do so, but according to the ICC that is not always possible for a foreign seller. Often the declaration is made in the buyer's name with the buyer's EORI number, and then the buyer is the declarant and the debtor of the customs debt. So ask in advance in whose name the declaration is made.
Does the Incoterm affect the customs value?
Yes. Import duty is calculated on the customs value, which includes the cost of transport and insurance up to the place where the goods enter the EU. The Incoterm decides what is already in the invoice price and what you must add or may deduct. See the table in the section on the Incoterm and your customs value.
Sources
Verified: November 2026.
- ICC: Incoterms 2020
- ICC Academy: EXW or DDP
- ICC Academy: FCA or FOB
- ICC Academy: FAS or FOB
- ICC Academy: CPT or CIP
- ICC Academy: CFR or CIF
- ICC Academy: CIP or CIF
- ICC Academy: DPU or DAP
- ICC Academy: DAP or DDP
- ICC Academy: C or D rules
- ICC: Incoterms 2020 FCA and CPT, best practice for shipping containers through ports
- Union Customs Code: Regulation (EU) 952/2013, Articles 5, 18, 70 to 72, 77 and 170 (EUR-Lex)
- Implementing Regulation (EU) 2015/2447, Article 137: place of entry (EUR-Lex)
- VAT Directive 2006/112/EC, Articles 32 and 201 (EUR-Lex)
This page helps you prepare and is not legal or customs advice. The full text of the Incoterms rules is in the ICC publication. Check important points with your forwarder or customs.
