Incoterms® 2020
Incoterms® 2020
Incoterms® 2020 Quick Reference Guide
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Where can you find SEAL Express Logistics
E-mail Address
office@seal-logistics.ro
Phone Number
+40 241 613 075/85
Incoterms® 2020
Incoterms® 2020 are internationally recognized trade terms published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers in international trade transactions, including transportation arrangements, customs formalities, transfer of risk and logistics costs.
Used worldwide in sea freight, air freight, road transport and multimodal logistics operations, Incoterms® help clarify shipping obligations throughout the logistics process.
Used worldwide in sea freight, air freight, road transport and multimodal logistics operations, Incoterms® help clarify shipping obligations throughout the logistics process.
WHAT DO INCOTERMS DEFINE?
These rules establish which party arranges and pays for transportation throughout the shipment journey.
They also define the exact point at which responsibility for cargo risk transfers from seller to buyer.
Export, import and customs-related formalities, together with transport documentation obligations, are allocated between the contracting parties depending on the selected rule.
Certain trade terms require cargo insurance to be arranged either by the seller or by the buyer.
COMMON INCOTERMS® COMPARISONS
EXW places most transport and customs responsibilities on the buyer, while DDP assigns nearly all logistics obligations to the seller, including import customs clearance and duties.
Under both FOB and CIF, risk transfers once the cargo is loaded on board the vessel. However, under CIF the seller also arranges ocean freight and cargo insurance to the destination port.
FCA is generally more suitable for containerized cargo, while FOB is traditionally used for non-containerized maritime shipments.
Both rules require the seller to arrange carriage to the agreed destination, but CIP additionally requires cargo insurance coverage.
Under DAP, cargo is delivered ready for unloading, while under DPU the seller remains responsible until unloading is completed at destination.
IMPORTANT PRACTICAL CONSIDERATIONS
Using only the trade term without specifying the exact location may create operational ambiguity regarding delivery obligations and transfer of risk.
Under CFR and CIF, for example, the seller pays for transportation to the destination port even though the risk transfers earlier, once the cargo is loaded on board the vessel.
In container shipping, cargo is typically delivered to the carrier at terminal facilities before being loaded on board the vessel. For this reason, FCA is frequently considered more appropriate operationally than FOB for containerized shipments.
Under EXW, the buyer may face operational limitations related to export procedures in the country of origin. Under DDP, the seller assumes extensive import-related responsibilities, which may include customs formalities, duties, taxes and local regulatory requirements.
The rules define responsibilities related to transportation, costs and risk, but they do not determine cargo ownership or payment terms.
Need help choosing the right shipping terms?
Our logistics specialists can help you select the most suitable solution based on your cargo type, transport mode and delivery requirements.