Incoterms® 2020: the complete guide to the 11 rules for importing from Asia

Your supplier quotes a "FOB Ningbo" price, your freight forwarder (the provider that organizes your transport) talks about "FCA." Behind those three letters lie thousands of euros or dollars and one simple question: if the goods are lost in transit, who pays? This guide explains the eleven rules for a buyer in the European Union (EU), the UK or North America who imports from Asia.

What is an Incoterms® rule?

The Incoterms® rules (International Commercial Terms) are published by the International Chamber of Commerce (ICC), which created them in 1936. The current edition, Incoterms® 2020, was launched in September 2019 and came into force on January 1, 2020. Incoterms® is a registered trademark of the ICC.

They are not rules of law: they apply only if the sales contract refers to them. A three-letter rule then answers four questions:

• Where are the goods delivered, and therefore when does the risk of loss or damage pass to the buyer?
• Who organizes and pays for the main carriage?
• Who must insure the goods for the other party's benefit (only under CIF and CIP)?
• Who completes the customs formalities for export and import?

Everything else falls under the contract: price and payment, transfer of title (distinct from the transfer of risk), specifications, remedies for defects or delay, applicable law, disputes, force majeure, sanctions and the level of customs duties.

The 11 rules in two families

Four rules refer to the vessel and are reserved for sea and inland waterway transport: FAS, FOB, CFR and CIF. The other seven suit all modes, including container, air, express and rail: EXW, FCA, CPT, CIP, DAP, DPU and DDP.

The first letter gives a clue:

• E: the goods are made available at the seller's premises;
• F: the seller hands them to the carrier chosen and paid by the buyer;
• C: the seller pays the main carriage, but risk passes to the buyer at origin;
• D: the seller bears carriage and risk all the way to destination.

The seven rules for all modes

EXW (Ex Works)

The seller makes the goods available at its premises, without loading them or clearing them for export. The buyer handles everything, export included.

FCA (Free Carrier)

The seller clears the goods for export and hands them to the buyer's carrier at the agreed place: loaded on the vehicle if it is the seller's premises, ready for unloading elsewhere (terminal, freight forwarder's warehouse). Risk passes at that moment.

CPT (Carriage Paid To)

The seller clears the goods for export and pays carriage to the agreed destination, but risk passes as soon as the goods are handed to the first carrier. No insurance is required.

CIP (Carriage and Insurance Paid To)

Like CPT, plus insurance taken out by the seller for the buyer's benefit: by default, the Institute Cargo Clauses (the standard cargo insurance clauses of the London market) in version (A), known as "all risks" except exclusions, for at least 110% of the contract price.

DAP (Delivered at Place)

The seller bears carriage and risk up to the agreed place, where it delivers the goods ready for unloading. The buyer unloads, clears customs on import and pays duties and taxes.

DPU (Delivered at Place Unloaded)

Like DAP, but the seller unloads and keeps the risk until unloading is complete: it is the only rule that requires the seller to do so.

DDP (Delivered Duty Paid)

The seller delivers at destination after clearing customs on import and paying duties and taxes: it effectively becomes the importer.

The four maritime rules

FAS (Free Alongside Ship)

The seller clears the goods for export and places them alongside the buyer's vessel at the agreed port, where risk passes. The buyer pays loading and freight.

FOB (Free On Board)

The seller clears the goods for export and delivers them on board the vessel chosen by the buyer, who pays the freight; risk passes once the goods are on board. Very common in Asia, this rule is a poor fit for containers (see below).

CFR (Cost and Freight)

The seller pays freight to the port of destination, but risk passes on board, at origin. No insurance is due: the buyer has every interest in insuring the goods.

CIF (Cost, Insurance and Freight)

Like CFR, plus insurance for the buyer's benefit, by default under clauses (C), limited to major events, for at least 110% of the price.

Comparison table of the 11 rules

Except under DDP, the buyer clears customs on import and pays the duties; only EXW also leaves export to the buyer. "No" in the insurance column (due by the seller) does not make insurance unnecessary: whoever carries the risk has an interest in insuring.

To see, step by step, who pays and who carries the risk under the rule you choose:

What changed between 2010 and 2020

The 2020 edition neither added nor removed any rule. The ICC lists seven changes:

1. DAT becomes DPU: the former DAT rule (Delivered at Terminal) is renamed, because delivery unloaded can take place somewhere other than a terminal.
2. Two levels of insurance: CIF keeps clauses (C), designed for maritime trade in commodities; CIP moves to clauses (A), better suited to manufactured goods.
3. FCA and "on board" bill of lading: the bill of lading (B/L) is the maritime transport document that also represents the goods. The parties may agree that the buyer's carrier will issue the seller an "on board" bill of lading, often required under a documentary credit (letter of credit, L/C: payment guaranteed by a bank against compliant documents).
4. Own means of transport: under FCA, the buyer may collect the goods with its own vehicle; under DAP, DPU and DDP, the seller may deliver with its own trucks, without a third-party carrier.
5. Security: transport- and customs-related security obligations are explicitly allocated, along with their costs.
6. Grouped costs: each rule has ten articles, A1 to A10 for the seller and B1 to B10 for the buyer; all costs for each party are summarized in A9 and B9.
7. Explanatory notes: each rule opens with notes explaining when to use it.

Where does the "Incoterms® 2030" revision stand?

The ICC revises its rules about every ten years (2000, 2010, 2020). Its 2026 work program calls for starting the revision and preparing the ground for the Incoterms® 2030 rules. According to the official ICC pages consulted on September 25, 2026, no draft text and no effective date have been published.

• Incoterms® 2020 remains the reference for any contract signed today.
• "Incoterms 2025" or "2026" do not exist: the ICC advises relying only on its own content and that of its national committees.

How to write an Incoterms® rule into a contract

The ICC recommends three elements: the rule, the named place as precisely as possible, the version. Example: "FCA Yantian International Container Terminals, Shenzhen, China, Incoterms® 2020".

Note: in E, F and D rules, the place indicates where the goods are delivered; in C rules, it indicates the destination paid for by the seller, not the place where risk changes hands. In a C rule, therefore, also specify the place of delivery at origin.

Under DDP, also check that the seller can clear customs in your country, otherwise prefer DAP (see below).

Costed example: a container from Shenzhen to Europe

Two takeaways:

• Compare on the same rule: the CIF quote at USD 65,100 is not necessarily more expensive than the FOB quote at USD 61,500; convert it to FOB + freight + insurance before comparing.
• The point where risk transfers matters: a container damaged at the Yantian terminal before loading is at the seller's risk under FOB, but already at the buyer's risk under FCA.

The full method, from supplier price to the landed cost at your warehouse:

Related guide

Calculating the landed cost of an imported product: method and costed example

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To cost out your own case:

Common mistakes when importing from Asia

FOB in containers: prefer FCA

In containers, the seller delivers its goods to the terminal well before loading, but under FOB it retains the risk until they are on board, at a site it no longer controls. The ICC states that FCA is then the appropriate rule; the "on board" bill of lading option addresses banks' objection. With several suppliers, deliver FCA to the consolidation warehouse (see multi-supplier consolidation in China).

CIF and minimal insurance

Under CIF, the seller chooses the insurer and owes only Clauses (C): a closed list of major events, such as fire, explosion, stranding or capsizing, or general average (the cost of a sacrifice made to save the vessel, shared between the vessel and the cargo).

Theft or breakage during handling is in principle not included: have an insurer confirm the coverage. For manufactured goods, prefer CIP, negotiate Clauses (A), or buy FCA and insure yourself.

EXW with no exporter

Under EXW, the export is the buyer's responsibility. Yet Chinese customs law reserves declaration to shippers and consignees registered with Chinese customs, or to customs brokers acting for them. Without an entity in China, the buyer depends on the factory or a third party to declare, with no contract saying who is liable. If the export is likely to be a problem, the ICC recommends FCA, which assigns that customs clearance to the seller.

DDP: who can import in your country?

Under DDP, the seller clears customs on import: it must therefore be able to act as importer in your country.

• EU: the declarant must in principle be established in the Union (Article 170(2) of the Union Customs Code).
• UK: according to the ICC, the importer must generally be registered with customs and for VAT, which is harder for a foreign company.
• US: a foreign company can clear customs in its own name through a representative, with a customs bond issued by a surety established in the US and a resident agent in the state of the port of entry.
• Canada: the conditions for a non-resident seller (customs, GST/HST) should be confirmed with a customs broker.

Where VAT applies, the seller must usually register for it, sometimes through a fiscal representative (a local agent liable for its VAT obligations), to recover import VAT and invoice you local VAT; the arrangements vary by country. It also bears any increase in duties during the contract, unless there is a revision clause.

The ICC suggests DAP or DPU as an alternative. See our guide to import customs clearance in the EU, the UK and the US.

Choosing your rule in practice

• You have a freight forwarder and want to control freight and insurance: FCA, at the supplier or at the consolidation warehouse.
• The supplier arranges transport: CPT or CIP for containers, CFR or CIF for bulk, knowing that the risk in transit is yours.
• Delivery to your door, customs kept in hand: DAP, or DPU if the seller can unload.

To compare these options case by case:

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If you entrust us with the entire chain, from pickup to delivery including consolidation in China, the rule and place of delivery are set out in the specification of our end-to-end service; the flows are described on the logistics page.