All Eleven Incoterms, Grouped Into Four

Memorizing eleven terms one by one leads to confusion. Grouping them by their first letter makes the structure visible.

What Incoterms determine

Incoterms are the trade terms published by the International Chamber of Commerce (ICC). Between seller and buyer, they settle three things.

Who bears cost and up to which point, when risk transfers, and which party carries which obligations. Customs formalities, carriage contracts, and insurance fall under that last category.

The current version is Incoterms 2020, containing eleven terms.

Group E: Departure

Just one term: EXW (Ex Works). The seller delivers at their own premises and that is the end of it. No loading, no export clearance.

This is the lightest obligation a seller can take on. Correspondingly, the buyer carries a heavy load, having to handle export clearance in a foreign country. In practice it is used for near-domestic transactions or where the buyer has a local agent in place.

Group F: Main carriage unpaid

The seller brings goods to a named place, but the buyer pays the main carriage cost.

FCA (Free Carrier) Delivery to the carrier nominated by the buyer at a named place. Usable for any transport mode, which makes it highly versatile.

FAS (Free Alongside Ship) Delivery is complete once goods are placed alongside the vessel at the port of shipment. Sea transport only.

FOB (Free On Board) Delivery is complete once goods are loaded on board at the port of shipment. Sea only, and the most used term in this group.

How to remember Group F

F is for Free. The seller is free of the carriage cost. The buyer pays freight.

Group C: Main carriage paid

The seller pays carriage to the destination, but risk transfers at origin. The split between cost transfer and risk transfer is what defines this group.

CPT (Carriage Paid To) The seller pays carriage to the destination. Risk transfers on handover to the first carrier. Usable for any transport mode.

CIP (Carriage and Insurance Paid To) CPT with an insurance obligation added. Incoterms 2020 raised the default coverage level to Institute Cargo Clauses (A).

CFR (Cost and Freight) The seller pays freight to the destination port. Risk transfers on loading at the port of shipment. Sea transport only.

CIF (Cost, Insurance and Freight) CFR with an insurance obligation added. Default coverage is Institute Cargo Clauses (C), lower than CIP. Sea transport only.

Free resource

CIF and FOB Practical Guide (PDF)

Includes a comparison table of all eleven Incoterms organized by transport mode and risk transfer point. FOB and CIF, the two most used in practice, are broken down into seller and buyer obligations, with a letter of credit document checklist attached.

Download free → https://guild.tflowx.com/post/96

Group D: Arrival

The seller bears both risk and cost to the destination. The heaviest obligations fall here.

DAP (Delivered At Place) Delivery at the named destination, not unloaded. Import clearance is the buyer's responsibility.

DPU (Delivered At Place Unloaded) DAP with unloading included. Introduced in Incoterms 2020, replacing the former DAT.

DDP (Delivered Duty Paid) The seller handles import clearance and pays duties. The heaviest seller obligation of all eleven terms.

Two checks before choosing

Transport mode. FAS, FOB, CFR, and CIF apply to sea and inland waterway only. They cannot be used for air freight. The other seven work for any mode.

Containers. Where containerized cargo is handed over at a terminal, FCA and CIP fit better than FOB or CIF. Using a term whose risk transfer depends on loading on board leaves the seller bearing risk from terminal receipt until loading, a phase they no longer control.