SUMMARY OF 11 INCOTERMS® 2020 RULES: WHICH IS THE BEST CHOICE FOR YOUR BUSINESS?

At first glance, Incoterms may seem dry and complex, but at their core, they simply answer three key questions:
Who does what? Who pays for what? And who bears the risk at each stage?
Understanding these rules helps businesses avoid costly disputes and financial losses.

PART 1: 7 RULES FOR ANY MODE OF TRANSPORT

(Applicable for road, sea, air, or multimodal transport)

1. EXW (Ex Works)

• Seller: Prepares goods at their premises only.

• Buyer: Handles everything else (pickup, export/import clearance, transport).

• Risk transfer: At seller’s premises.
  👉 Max responsibility for Buyer, minimum for Seller.

2. FCA (Free Carrier)

• Seller: Clears export and delivers goods to carrier.

• Buyer: Arranges main transport and import clearance.

• Risk transfer: When goods are handed to the first carrier.
  👉 Highly flexible, recommended for container shipments.

3. CPT (Carriage Paid To)

• Seller: Pays transport to destination.

• Buyer: Handles import and unloading.

• Risk transfer: When goods are handed to the first carrier (NOT at destination).
  ⚠️ Important: Cost ≠ Risk.

4. CIP (Carriage and Insurance Paid To)

• Same as CPT, but:

• Seller must buy insurance (maximum coverage under Incoterms 2020).
  👉 Better protection for Buyer.

5. DAP (Delivered at Place)

• Seller: Delivers goods to destination (not unloaded).

• Buyer: Handles import clearance and unloading.

• Risk transfer: At destination, before unloading.

6. DPU (Delivered at Place Unloaded)

• Seller: Delivers AND unloads goods at destination.

• Buyer: Handles import clearance.
  👉 Only rule where Seller is responsible for unloading.

7. DDP (Delivered Duty Paid)

• Seller: Handles EVERYTHING (transport, export/import clearance, taxes).

• Buyer: Only receives goods.
  👉 Maximum responsibility for Seller.

PART 2: 4 RULES FOR SEA & INLAND WATERWAY TRANSPORT

8. FAS (Free Alongside Ship)

• Seller: Delivers goods alongside vessel.

• Buyer: Loads goods, pays freight, handles import.

• Risk transfer: Alongside ship.

9. FOB (Free On Board)

• Seller: Loads goods onto vessel.

• Buyer: Pays sea freight and import clearance.

• Risk transfer: Once goods are onboard.
  👉 Very popular, but not ideal for container shipments (use FCA instead).

10. CFR (Cost and Freight)

• Seller: Pays freight to destination port.

• Buyer: Handles import clearance.

• Risk transfer: When goods are onboard at origin.
  👉 Seller pays, but Buyer bears risk during transport.

11. CIF (Cost, Insurance and Freight)

• Same as CFR, plus:

• Seller buys insurance (minimum coverage).

KEY TAKEAWAY: HOW TO CHOOSE THE RIGHT INCOTERM?

• Want maximum control? → Choose EXW or FCA

• Want balanced responsibility? → Choose FOB, CFR, CIF

• Want convenience (door-to-door)? → Choose DAP, DPU, DDP

• Shipping containers? → Prefer FCA instead of FOB

DON’T LET INCOTERMS SLOW YOU DOWN – LET SONGWIN HANDLE IT

Understanding theory is one thing—handling real-world logistics challenges is another. That’s where Songwin Logistics comes in:

• Trade contract consulting: Choose the most beneficial Incoterms

• Competitive sea & air freight: Global connections across 100+ countries

• Fast customs clearance: Minimize delays and unexpected costs

• Trucking & door-to-door services: Complete first-mile & last-mile solutions

👉 Turn complexity into competitive advantage with Songwin’s expertise.

CONTACT US

SONGWIN INTERNATIONAL LOGISTICS VIETNAM CO., LTD

📍 Address: 344 Nguyen Trong Tuyen Street, Tan Son Hoa Ward, Ho Chi Minh City
📞 Hotline: 083.681.3969 - 0373.262.105
📧 Email: Sales2@songwinlog.com

Songwin Logistics – Reputation Builds the Brand, Professionalism Drives Success.