Cost and risk are not the same line
CPT, CIP, CFR and CIF are the classic trap: the seller pays the freight, but the buyer can still take risk much earlier.
Trade Terms Reference
Incoterms 2020 Guide
A practical Freightshop reference for understanding where cost, risk, customs responsibility, insurance obligations and final delivery control shift between seller and buyer.
Freightshop11rulesdecoded
A clearer way to compare EXW through DDP without losing the legal meaning.
Compare delivery points, risk transfer, insurance obligations, customs responsibility and tariff ownership at a glance without losing the legal meaning of the rules.
Sea-only rules are not for every export
FAS, FOB, CFR and CIF are for sea and inland waterway transport only. If the carrier takes the goods before they are on board, FCA, CPT or CIP is usually a better fit.
The named place is part of the rule
A contract should not stop at 'FCA' or 'DAP'. The named point tells both sides exactly where delivery, cost and risk move.
DDP is the tariff exception
The April 2025 ICC tariff-risk guidance is explicit: DDP is the only Incoterms 2020 rule where the seller pays tariffs.
The named port, place or point is part of the rule, not a footnote.
Any mode7 rules
Sea only4 rules
Seller pays tariffsDDP only
Seller unloadsDPU only
Read each rule in three passes
- Where delivery happens.
- Where risk transfers.
- Which costs and border obligations stay with each party.
Responsibility ladder
Ordered from minimum seller commitment to maximum seller commitment.
The cards below move from EXW through DDP and clearly flag which rules are restricted to sea and inland waterway transport.
EXW
Ex Works
Maximum buyer responsibility
Cost
Risk
OriginBorderDestination
- Delivery
- Goods are placed at the buyer's disposal at the seller's premises or another named place, not loaded.
- Risk
- Risk transfers as soon as the goods are made available at that named place.
- Seller role
- Makes the goods available only.
- Buyer role
- Handles loading, export clearance, carriage, import clearance and delivery.
Very limited use where the buyer can control collection and export formalities directly.
Usually not recommended for international exports because the buyer carries export clearance risk from the start.
FCA
Free Carrier
Origin handover
Cost
Risk
OriginBorderDestination
- Delivery
- Seller delivers either by loading onto the buyer's vehicle at the seller's premises or by placing goods at the buyer's carrier's disposal at another named place.
- Risk
- Risk transfers at that FCA delivery point after export clearance.
- Seller role
- Clears for export and delivers to the named handover point.
- Buyer role
- Takes risk from carrier handover onward and manages the main move to destination.
Containerised or multimodal exports where the seller can hand over before the main leg.
The named place matters: responsibility can shift depending on whether handover happens at the seller's premises or somewhere else.
FAS
Free Alongside Ship
Quayside sea handover
Cost
Risk
OriginBorderDestination
- Delivery
- Goods are placed alongside the vessel nominated by the buyer at the named port of shipment.
- Risk
- Risk transfers when the goods are alongside the ship.
- Seller role
- Brings goods to the quay, cleared for export.
- Buyer role
- Handles loading on board, ocean freight, import clearance and onward delivery.
Bulk or non-containerised sea shipments where quay-side handover is commercially practical.
Sea and inland waterway transport only. Not a good fit where goods are handed to a carrier before reaching the vessel.
FOB
Free On Board
On-board sea handover
Cost
Risk
OriginBorderDestination
- Delivery
- Seller loads the goods on board the vessel nominated by the buyer at the named port of shipment.
- Risk
- Risk transfers once the goods are on board the vessel.
- Seller role
- Gets goods exported and loaded on board.
- Buyer role
- Takes risk once loaded and pays the ocean leg and destination side.
Traditional port-to-port sea transactions where the seller can control vessel loading.
Sea and inland waterway transport only. For container terminal handover before loading, FCA is usually the safer fit.
CFR
Cost and Freight
Seller pays ocean freight, buyer takes risk at loading
Cost
Risk
OriginBorderDestination
- Delivery
- Seller loads the goods on board and contracts the freight to the named port of destination.
- Risk
- Risk transfers once the goods are on board at the port of shipment, even though the seller pays the freight.
- Seller role
- Pays export-side costs and the ocean freight to destination port.
- Buyer role
- Carries transit risk from loading onward and handles import-side charges.
Sea freight where the seller can buy the main carriage but the buyer accepts transit risk.
Sea and inland waterway transport only. If goods are handed over before loading on board, CPT is usually the better term.
CIF
Cost, Insurance and Freight
Seller pays ocean freight and insurance, buyer takes risk at loading
Cost
Risk
OriginBorderDestination
- Delivery
- Seller loads the goods on board, buys the freight to destination port and procures cargo insurance.
- Risk
- Risk still transfers once the goods are on board at the port of shipment.
- Seller role
- Pays export-side costs, freight and minimum sea insurance to the destination port.
- Buyer role
- Carries transit risk from loading onward and manages the import side.
Sea transactions where the buyer wants seller-arranged freight and baseline cargo insurance.
Sea and inland waterway transport only. Insurance is seller-arranged, but risk still shifts at the port of shipment.
CPT
Carriage Paid To
Seller pays main carriage, buyer takes risk at first carrier
Cost
Risk
OriginBorderDestination
- Delivery
- Seller hands the goods to the first carrier and contracts carriage to the named destination.
- Risk
- Risk transfers when the goods are handed to the first carrier, not on arrival.
- Seller role
- Arranges carriage to the named destination after export clearance.
- Buyer role
- Carries transit risk from first-carrier handover even though the seller pays the carriage.
Multimodal or containerised flows where the seller buys the linehaul but risk should shift earlier.
Customers often confuse paid freight with retained risk. Under CPT, they are not the same thing.
CIP
Carriage and Insurance Paid To
Seller pays carriage and stronger insurance, buyer takes risk at first carrier
Cost
Risk
OriginBorderDestination
- Delivery
- Seller hands the goods to the first carrier, contracts carriage to destination and procures cargo insurance.
- Risk
- Risk transfers when the goods are handed to the first carrier, even though the seller pays carriage and insurance.
- Seller role
- Pays carriage to the named destination and must arrange cargo insurance.
- Buyer role
- Carries transit risk from first-carrier handover and manages the import side.
Higher-value multimodal moves where the buyer wants seller-arranged transport and stronger default insurance.
Like CPT, seller-paid carriage does not mean seller keeps transit risk past first-carrier handover.
DAP
Delivered at Place
Seller carries through to destination, not import clearance
Cost
Risk
OriginBorderDestination
- Delivery
- Goods are placed at the buyer's disposal on the arriving means of transport, ready for unloading, at the named destination place.
- Risk
- Risk transfers at the named destination place before unloading.
- Seller role
- Takes the shipment through to arrival at the named place.
- Buyer role
- Handles import clearance, duties and unloading.
Door or site delivery where the seller will manage the move right up to arrival.
Buyer still handles import clearance and tariffs, and unloading remains with the buyer.
DPU
Delivered at Place Unloaded
Seller carries through unloading
Cost
Risk
OriginBorderDestination
- Delivery
- Goods are placed at the buyer's disposal after unloading at the named destination place.
- Risk
- Risk transfers only once the goods have been unloaded.
- Seller role
- Takes the shipment through arrival and unloading at destination.
- Buyer role
- Handles import clearance and tariffs after seller-arranged delivery.
Projects, events or sites where the seller must deliver and unload at the named place.
DPU is the only Incoterms 2020 rule where the seller must unload at destination.
DDP
Delivered Duty Paid
Maximum seller responsibility
Cost
Risk
OriginBorderDestination
- Delivery
- Goods are placed at the buyer's disposal, cleared for import, ready for unloading at the named destination place.
- Risk
- Risk transfers at the named destination place before unloading.
- Seller role
- Carries the shipment through export, carriage, import clearance, duties and final delivery.
- Buyer role
- Mainly receives the goods and unloads.
Landed-price commitments where the seller can legally and operationally manage import clearance in the destination country.
DDP is the only rule in the April 2025 ICC tariff-risk guidance where the seller pays tariffs. It can be difficult if the seller cannot be importer of record.
Comparison matrix
Who pays, files or carries each step across the shipment journey.
This full-width table is designed for side-by-side comparison on desktop and remains scrollable on smaller screens so the detail stays legible.
Seller
Buyer
Split
Buyer**
| Responsibility | EXWAny mode | FCAAny mode | FASSea only | FOBSea only | CFRSea only | CIFSea only | CPTAny mode | CIPAny mode | DAPAny mode | DPUAny mode | DDPAny mode |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Export packing | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Warehouse/loading charges at origin point | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Pre-carriage to named place1 | Buyer | Split | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Export customs formalities | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Origin terminal charges | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Loading on exporting carrier | Buyer | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| International freight | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Forwarder's fees at destination | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Seller |
| Destination terminal charges2 | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer** | Buyer** | Seller | Seller | Seller |
| Security filing3 | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller |
| Import customs formalities | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller |
| Customs duties, taxes and fees | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller |
| Delivery to destination | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Seller |
| Unloading at delivery point | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller | Buyer |
1.FCA can split depending on whether the named place is the seller's premises or another point.
2. For CPT and CIP, unloading-related destination terminal costs may still sit with the buyer unless the carriage contract says otherwise.
3. Security filing example: ISF filings to the USA.
Sea-only caution: FAS, FOB, CFR and CIF work for sea and inland waterway transport only. Where cargo is handed to a carrier at a terminal before it is on board, FCA, CPT or CIP will usually map reality better.
Tariff lens
Who pays import tariffs?
The April 2025 ICC guidance note is blunt on this point: DDP is the only Incoterms 2020 rule where the seller pays tariffs. Every other rule leaves tariffs with the buyer.
EXWBuyer
FCABuyer
FASBuyer
FOBBuyer
CFRBuyer
CIFBuyer
CPTBuyer
CIPBuyer
DAPBuyer
DPUBuyer
DDPSeller
DDP can look customer-friendly, but only use it where the seller can realistically manage import clearance and act in the destination country without creating customs or tax friction.
Insurance lens
Which rules force seller-arranged insurance?
CIF
Seller must procure insurance. Under Incoterms 2020, CIF keeps the more limited default cover traditionally associated with ICC Clause C or equivalent.
CIP
Seller must procure insurance. Under Incoterms 2020, CIP default cover was raised to ICC Clause A or equivalent.
All other rules
No seller insurance obligation is built into the rule. Insurance should follow the actual risk-transfer point and the contract strategy, not assumption.
Customs value matrix
How customs cost components change across the Incoterms set.
Optional, mandatory and not-allowed customs cost flags are shown below in the same EXW to DDP order so it is easier to connect the commercial rule with customs-value treatment.
O Optional
M Mandatory
X Not allowed
| ABF code | Meaning | EXW | FCA | FAS | FOB | CFR | CIF | CPT | CIP | DAP | DPU | DDP |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| PC | Packing costs | O | X | X | X | X | X | X | X | X | X | X |
| FIFT | Foreign inland freight | O | O | X | X | X | X | X | X | X | X | X |
| ONS | Overseas insurance | X | X | X | X | X | M | X | M | M | M | M |
| OFT | Overseas freight | X | X | X | X | M | M | M | M | M | M | M |
| LCH | Landing charges | X | X | X | X | X | X | X | X | M | M | M |
| COMM | Commissions | O | O | O | O | O | O | O | O | O | O | O |
| OTH(A) | Other additions | O | O | O | O | O | O | O | O | O | O | O |
| OTH(D) | Other deductions | O | O | O | O | O | O | O | O | O | O | O |
| DSC | Discounts | O | O | O | O | O | O | O | O | O | O | O |
What changed in 2020
The practical shifts customers still miss.
- DAT was renamed DPU (Delivered at Place Unloaded).
- FCA now allows bills of lading after loading in the right setup.
- CIP default insurance was raised to ICC Clause A, while CIF keeps the lighter Clause C-style default cover.
- Cost allocation is clearer, and security obligations are more prominent.
Use this guide well
Three final cautions before you pick a rule.
- Incoterms allocate delivery, cost and risk. They do not replace transport contracts, insurance policies, customs law or tax law.
- The exact named place or named port should be written into the contract and matched on the invoice and shipping documents.
- If the operational reality is container terminal handover, don't force a sea-only rule just because it sounds familiar.