What an Incoterms rule does—and does not do
An Incoterms 2020 rule allocates specified delivery tasks, costs and risk between seller and buyer. It identifies a delivery point and clarifies who arranges key transport and customs steps.
It does not by itself set the price, payment method, transfer of ownership, product quality or dispute law. Those points belong in the sales contract.
Common terms in export quotations
EXW places substantial collection responsibility on the buyer. FCA is used when the seller delivers to the buyer's nominated carrier. FOB, CFR and CIF are sea or inland-waterway terms, while DAP can be used across transport modes to a named place.
For containerized cargo handed to a carrier before loading on a vessel, buyers should compare FCA/CPT/CIP structures rather than automatically requesting FOB/CIF.
How to compare two quotations
Check that both offers name the same rule, place and version, then compare:
- Exact delivery point and point of risk transfer
- Export and import customs responsibilities
- Main freight, terminal and destination charges
- Insurance responsibility and required cover
- Document handover and payment milestones
Frequently asked questions
Does CIF mean the seller carries risk to the destination port?
No. Under CIF the seller pays cost, freight and specified insurance to the named destination port, but risk transfers earlier when the goods are on board at the port of shipment.
Which Incoterms rules can be used for air freight?
Rules for any mode, including EXW, FCA, CPT, CIP, DAP, DPU and DDP, can apply to air freight. FOB, CFR and CIF are reserved for sea and inland waterway transport.
Should the place and version be written in the contract?
Yes. State the chosen rule, the precise named place or port and ‘Incoterms 2020’ in the quotation and contract.