Incoterms 2020: All 11 Rules Explained, with Chart and Picker
Incoterms® 2020 are the eleven three-letter trade terms published by the International Chamber of Commerce — EXW, FCA, FOB, CIF, DDP and the rest — that decide who pays for each leg of an international shipment and where the risk passes from seller to buyer. Compare all eleven in the chart, answer three questions for a suggested term, and see which one fits an India to USA ocean shipment.
Which Incoterm fits your shipment?
The most widely quoted sea term, so it is the easiest to benchmark between suppliers. Gives you control of the ocean leg without taking on export formalities.
Risk transfers: When the goods are on board the vessel at the named port of shipment.
Let the seller book the freight if their rates are better, but note that risk still passes at origin — insure the ocean leg yourself.
Risk transfers: When the goods are on board the vessel at the port of shipment — even though the seller pays the freight to destination.
The simplest to administer if you would rather receive a delivered price and only handle the customs entry at your end.
Risk transfers: At the named destination, with the goods ready for unloading from the arriving vehicle.
These suggestions are a starting point for negotiating with your supplier, not legal advice. The published ICC rules and your sales contract govern.
Incoterms 2020 chart: who does what under each rule
Incoterms 2020 has two groups. Seven rules work for any mode of transport, including air, road, rail and containerized multimodal moves; four — FAS, FOB, CFR and CIF — are for sea and inland waterway transport only. "Buyer" or "Seller" shows which party arranges and pays for each item. On a phone, scroll the table sideways.
| Rule | Export clearance | Main carriage | Insurance | Import clearance & duty | Risk transfers |
|---|---|---|---|---|---|
| Rules for any mode of transport (7) | |||||
| EXW Ex Works | Buyer | Buyer | Neither party is obliged | Buyer | At the seller’s premises, once the goods are placed at the buyer’s disposal — before loading. |
| FCA Free Carrier | Seller | Buyer | Neither party is obliged | Buyer | At the named place: when loaded onto the buyer’s collecting vehicle at the seller’s premises, or when placed at the carrier’s disposal, ready for unloading, elsewhere. |
| CPT Carriage Paid To | Seller | Seller | Neither party is obliged | Buyer | When the goods are handed to the first carrier — not at the destination the seller is paying to. |
| CIP Carriage and Insurance Paid To | Seller | Seller | Seller must insure — all-risks level cover, equivalent to Institute Cargo Clauses (A), for at least 110% of the contract value | Buyer | When the goods are handed to the first carrier. |
| DAP Delivered at Place | Seller | Seller | Neither party is obliged (the seller carries the risk, so usually insures its own interest) | Buyer | At the named destination, with the goods ready for unloading from the arriving vehicle. |
| DPU Delivered at Place Unloaded | Seller | Seller | Neither party is obliged (the seller carries the risk to the destination) | Buyer | At the named destination, once the goods have been unloaded from the arriving vehicle. |
| DDP Delivered Duty Paid | Seller | Seller | Neither party is obliged (the seller carries the risk to the destination) | Seller | At the named destination, with the goods ready for unloading. |
| Rules for sea and inland waterway transport only (4) | |||||
| FAS Free Alongside Ship | Seller | Buyer | Neither party is obliged | Buyer | When the goods are placed alongside the vessel at the named port of shipment. |
| FOB Free On Board | Seller | Buyer | Neither party is obliged | Buyer | When the goods are on board the vessel at the named port of shipment. |
| CFR Cost and Freight | Seller | Seller | Neither party is obliged | Buyer | When the goods are on board the vessel at the port of shipment — even though the seller pays the freight to destination. |
| CIF Cost, Insurance and Freight | Seller | Seller | Seller must insure — minimum cover, equivalent to Institute Cargo Clauses (C), for at least 110% of the contract value | Buyer | When the goods are on board the vessel at the port of shipment. |
The buyer pays import duty under every rule except DDP. Estimate yours with the free U.S. tariff simulator, and see how entries are filed through our licensed customs broker network.
FOB vs CIF: what is the difference?
The short answer: FOB and CIF move risk at exactly the same moment, when the goods are on board at the load port. What changes is who buys the ocean freight and the insurance. "FOB Nhava Sheva" is the goods plus export clearance and loading; "CIF New York" is that plus the freight and a basic policy to New York — but the cargo is at the buyer’s risk from Nhava Sheva either way.
Buyers usually prefer FOB because they choose the carrier, see the real freight cost, hold the bill of lading and keep destination charges on rates they negotiated. Sellers often prefer CIF because they keep control of the booking and the documents until they are paid, which matters when payment is by letter of credit or cash against documents. To compare a CIF offer with an FOB offer, strip out the freight and insurance first; that is also what happens to the customs value at entry.
| FOB (Free on Board) | CIF (Cost, Insurance and Freight) | |
|---|---|---|
| Transport mode | Sea and inland waterway only | Sea and inland waterway only |
| Delivery and risk transfer | On board the vessel at the named port of shipment | On board the vessel at the port of shipment — the same point |
| Who books and pays the ocean freight | Buyer, usually through its forwarder or NVOCC | Seller, to the named destination port |
| Cargo insurance | Neither party is obliged; the buyer carries the voyage risk | Seller must buy minimum cover (Institute Cargo Clauses (C) level) for at least 110% of the contract value |
| Who controls the carrier, routing and bill of lading | Buyer | Seller |
| Export clearance | Seller | Seller |
| Import clearance, duty and destination charges | Buyer | Buyer |
| US customs value | The FOB price already excludes international freight and insurance | Actual freight and insurance are deducted from the CIF price at entry |
| Better fit for containers | FCA | CIP |
Buying CIF and want broader cover, or cover to your door? See cargo insurance. The full articles: FOB, CIF and FCA.
Which Incoterm should I use for India to USA ocean freight?
In our experience, FOB is the most common term on the India to USA lane: the Indian exporter clears the export and loads the container at Nhava Sheva, Mundra, Chennai or another Indian port, and the US buyer books the ocean freight. That is a habit, not a rule. Here is how the five terms you will meet on this lane look from each side of the contract.
| Term | Indian exporter (seller) | US importer (buyer) |
|---|---|---|
| EXW | Least work on paper, but the export still has to be cleared in India, and India’s Foreign Trade Policy requires an Importer-Exporter Code (IEC) for exports, which a foreign buyer normally does not hold, so in practice the seller usually does it anyway. FCA at your factory says the same thing without the ambiguity. | Control from the factory door, but you need an agent in India for pickup, stuffing and export formalities. The price excludes inland freight to the port, so there is nothing to deduct for customs value. |
| FOB | You clear the export and pay the haulage, terminal and port charges up to loading. On a container you carry the risk until it is on board, days after the box left your hands at the terminal; FCA fixes that. | The usual choice. Your forwarder books the carrier, the bill of lading is issued to you, destination charges are on your rates, and the FOB price is already on a customs-value basis. |
| CIF | You book the freight and buy minimum insurance to the named US port, and you keep the bill of lading until you are paid. Risk still passes at the Indian port. For containers, the ICC points to CIP. | The seller’s forwarder picks the sailing and its US agent bills the destination charges. You carry the voyage risk on a restricted policy, and you need the actual freight and insurance figures to deduct them from customs value. |
| DAP | You carry cost and risk to the named US place — port, warehouse or door — but not the US customs entry or the duty. The cleanest way to offer a delivered price. | A delivered price, and you remain importer of record: you file the entry through your broker, pay the duty, and keep control of classification and value. |
| DDP | You take on the US customs entry and every duty layer, including Section 301, Section 232 or IEEPA duties where they apply. That means acting as US importer of record, or arranging for someone who legally can. | Simplest on paper, but the seller controls the classification, the declared value and the origin claim on your goods. If the entry is wrong, the shipment can still stall at the port. |
Why DDP makes the seller the US importer of record
Why DDP makes the seller the importer of record: DDP is the only rule that puts import clearance and duty on the seller, and in the United States the party that makes entry is the importer of record. Under 19 U.S.C. 1484(a)(2)(B) that must be the owner or purchaser of the goods, or a licensed customs broker the owner, purchaser or consignee designates. A DDP seller that still owns the goods at entry can act as importer of record, but then it needs a CBP importer number, a customs bond (19 CFR 142.4: merchandise is generally not released without a single-entry or continuous bond), and, as a foreign corporation, a resident agent in the state of the port of entry authorized to accept service of process (19 CFR 141.18). It is also liable for the duty.
An Indian exporter without that setup has two practical options: quote DAP and let the US buyer be importer of record, or arrange for a licensed customs broker to be designated importer of record and accept that the broker will want a bond and full documentation. What does not work is a DDP quote with no importer of record behind it.
Airlift is an FMC-licensed NVOCC (OTI 016162) with its own offices in India and the US, so we can take the booking from whichever side of the term you are on: from the Indian factory or port, or from the US buyer. US entries are filed through our licensed customs broker network. See the India to USA lane guide for ports and transit times, why exporters and importers use Airlift on this lane, and the tariff simulator to compare an FOB offer and a DDP offer on the same landed-cost basis.
How Incoterms affect US customs value and the ISF
US duty is charged on the transaction value: the price actually paid or payable for the goods, plus a short list of statutory additions — packing costs, selling commissions, assists, royalties and resale proceeds that go back to the seller (19 U.S.C. 1401a(b)(1)). The statute defines that price as excluding the costs of transportation, insurance and related services incident to the international shipment from the country of exportation to the place of importation in the United States (19 U.S.C. 1401a(b)(4)(A); 19 CFR 152.102(f)).
So the Incoterm does not change what is dutiable. It changes what is already inside the invoice price, and therefore what has to come out of it at entry.
| Terms | Invoice price includes | At US entry |
|---|---|---|
| EXW | The goods at the factory | Nothing to deduct. Foreign inland freight is not added to an ex-factory price (19 CFR 152.103(a)(5)). |
| FCA, FAS, FOB | The goods, export clearance and delivery to the carrier or vessel | No international freight or insurance to deduct. Inland freight to the port stays in the value unless it is shown separately and moves on a through bill of lading (19 CFR 152.103(a)(5)). |
| CFR, CIF, CPT, CIP | The goods plus freight (and, for CIF and CIP, insurance) to the named destination | Deduct the actual international freight and insurance. CBP’s position is that declaring a value net of estimated freight may be a failure to exercise reasonable care. |
| DAP, DPU, DDP | Delivery to the named US place; under DDP, US duties and taxes too | Deduct the actual international freight and insurance (19 U.S.C. 1401a(b)(4)(A)). US transportation after importation and, under DDP, the US duties and federal taxes also come out if they are identified separately from the price (19 U.S.C. 1401a(b)(3)). |
Incoterms do not move the Importer Security Filing either. The ISF for ocean cargo belongs to the ISF Importer, which 19 CFR 149.1 defines as the party causing the goods to arrive within the limits of a US port by vessel, or its authorized agent, and most elements are due no later than 24 hours before the cargo is laden aboard the vessel at the foreign port (19 CFR 149.2). On an FOB or FCA purchase the buyer’s forwarder has the booking and files it. On CFR or CIF the seller’s forwarder holds the booking data, so agree in writing who sends the elements and who files; the liability sits with the ISF Importer, not the seller. Airlift can file the ISF as your agent through its ISF service.
An Incoterms rule is the three-letter code in your purchase order — FOB, CIF, DDP — that decides who pays for each part of the shipment and at what point loss or damage becomes your problem instead of your supplier’s. Incoterms 2020 has eleven rules. The descriptions on this page are our paraphrase of the published ICC rules; your sales contract and the ICC text govern.
What an Incoterms rule settles — and what it doesn’t
Each rule answers three questions: who arranges and pays for each leg of transport and its paperwork, where delivery happens, and when the risk of loss or damage passes from seller to buyer. Agreeing on the rule and the named place that goes with it — "FCA Ningbo CFS," not just "FCA" — removes most of the ambiguity from a shipment.
Incoterms rules do not cover several things people often assume they do: when title (ownership) passes, payment terms, what happens if either party breaches the contract, or which law governs the sale. Those belong in the contract itself.
They also don’t set the customs value of your goods on their own. But the rule you choose decides which costs are inside the invoice price, and that affects how the entry is prepared.
The four groups at a glance
E — departure (EXW only). The seller makes the goods available at its own premises and does nothing else. Everything after that, export formalities included, is the buyer’s job.
F — main carriage unpaid (FCA, FAS, FOB). The seller clears the export and delivers to a carrier or a point at origin chosen by the buyer, who books and pays for the international leg.
C — main carriage paid (CPT, CIP, CFR, CIF). The seller books and pays for the main carriage to a named destination, but risk still passes at origin. Cost and risk split here, which is where most disputes start.
D — arrival (DAP, DPU, DDP). The seller carries both cost and risk to a named place in the buyer’s country. DPU adds unloading; DDP adds import clearance and duty.
The C-rule trap: the seller pays the freight, but you carry the risk
Under CFR, CIF, CPT, and CIP the seller pays for carriage to the destination, yet delivery — and therefore risk — happens at origin, when the goods are loaded on board or handed to the first carrier. "CIF Los Angeles" does not mean the seller is responsible until Los Angeles. If the container is lost mid-ocean, the goods were already at the buyer’s risk.
That is why insurance matters so much on C terms. Only CIF and CIP require the seller to insure, and their defaults differ: CIF requires restricted, named-perils cover, while Incoterms 2020 raised CIP to all-risks cover. Both are for at least 110% of the contract value, and both can be increased by agreement. Under every other rule, whoever carries the risk should arrange their own cover.
The importer pays the duty under every rule except DDP
Ten of the eleven rules leave import clearance, duties, and taxes with the buyer. Only DDP moves them to the seller — which in the United States means the seller must act as importer of record, with the customs bond and compliance exposure that brings. Sellers often quote DDP without realizing this, and the shipment stalls at the border while a workaround is found.
Whatever rule you agree on, the duty bill is driven by classification, origin, and customs value, not by the trade term. Estimate it up front with our free U.S. tariff simulator so you can compare an FOB offer and a DDP offer on the same landed-cost basis. Entries are filed through our licensed customs broker network, and we can act on either side of the term you agree.
Comparing what two terms will actually cost you? Size the cargo with the chargeable weight and CBM calculator, check the equipment with the container load calculator, and estimate the duty with the tariff simulator. The figures are planning estimates; the carrier's tariff governs.
Common Incoterms mistakes
- Using FOB (or CIF) for containers. The four sea rules deliver at the vessel. A container is handed to the carrier at the terminal, often days earlier, so the seller carries risk on cargo it no longer controls. The ICC’s guidance is that FOB may not be appropriate where goods are handed to the carrier before they are on board, as with containers, and that FCA should be considered instead; CIP is the counterpart for CIF. FOB is still the market habit, so negotiate rather than assume.
- Reading "CIF New York" as "the seller is responsible until New York". Under every C rule the seller pays to the destination, but risk passes at origin. If a container is lost at sea on CIF terms, the buyer claims on the policy; the seller has already delivered.
- Relying on the CIF insurance default. CIF requires only restricted, named-perils cover, and it need only run to the destination port. If you want all-risks cover or door-to-door cover, write it into the contract or buy your own policy.
- Quoting DDP with no importer of record. A foreign seller that agrees DDP to the United States has to act as importer of record, with a bond and a resident agent, or arrange a party who legally can. In our experience, DDP deals that skip this step often stall at the port.
- Deducting estimated freight from a CIF price. The freight and insurance taken out of customs value must be the actual amounts. Ask the seller to show them as separate lines on the invoice or to share the rated bill of lading and the policy.
- Choosing EXW for an export from India. The buyer can rarely clear an Indian export itself, so the seller does it anyway and the paperwork no longer matches the contract. Use FCA at the seller’s premises instead.
- Leaving out the named place or the edition. "FOB" alone does not say which port, and "FOB" on a US domestic purchase order usually means the Uniform Commercial Code term, not the Incoterms rule. Write the code, the place and the edition: "FCA Mundra CFS, Incoterms 2020".
- Expecting the Incoterm to settle payment or title. Incoterms rules cover delivery, costs and risk. When the buyer pays, when ownership passes and which law governs belong in the sales contract.
All 11 Incoterms rules explained
EXW — Ex Works
Any mode · Delivery: Seller’s named premises
The seller does the least of any rule: make the goods available at their own factory or warehouse, packed and identified, and nothing more. The buyer arranges collection, export formalities, main carriage, and import clearance, and carries the risk from the moment the goods are placed at their disposal. That is awkward for exports: the buyer, usually not established in the seller’s country, has to file the export declaration there. Many exporters quote EXW for simplicity and then help with loading and export paperwork anyway, which blurs who is responsible for what. FCA at the seller’s premises usually says the same thing commercially, with far less ambiguity.
- Risk transfers: At the seller’s premises, once the goods are placed at the buyer’s disposal — before loading.
- Insurance: Neither party is obliged
- Export clearance: Buyer · Import clearance and duty: Buyer
- Typically used for: Domestic sales, or buyers with their own agent at origin. Prefer FCA for exports.
- In depth:EXW in the glossary
FCA — Free Carrier
Any mode · Delivery: Named place at origin — seller’s premises or a terminal
The seller clears the goods for export and hands them to a carrier the buyer nominates, at a named place. It is the most flexible of the buyer-controlled rules and the best fit for containerized cargo, because delivery happens where the container is actually handed over, not at the ship’s rail. Incoterms 2020 added an FCA option under which the buyer can instruct the carrier to issue an on-board bill of lading to the seller. That fixes a long-standing problem: FCA sellers paid by letter of credit often need an on-board document.
- Risk transfers: At the named place: when loaded onto the buyer’s collecting vehicle at the seller’s premises, or when placed at the carrier’s disposal, ready for unloading, elsewhere.
- Insurance: Neither party is obliged
- Export clearance: Seller · Import clearance and duty: Buyer
- Typically used for: Containerized exports where the buyer books the freight. The modern replacement for FOB on containers.
- In depth:FCA in the glossary
FAS — Free Alongside Ship
Sea and inland waterway only · Delivery: Alongside the vessel at the port of shipment
The seller delivers by placing the goods alongside the ship — on the quay or in a barge — at the named port, having cleared them for export. The buyer takes over from that point, including loading, main carriage, and import formalities. It is meant for cargo loaded straight from the quayside — bulk commodities, project cargo, heavy lift — and makes little sense for containers, which are handed over at a terminal days before the vessel arrives.
- Risk transfers: When the goods are placed alongside the vessel at the named port of shipment.
- Insurance: Neither party is obliged
- Export clearance: Seller · Import clearance and duty: Buyer
- Typically used for: Bulk and breakbulk cargo loaded directly from the quay.
- In depth:FAS in the glossary
FOB — Free On Board
Sea and inland waterway only · Delivery: On board the vessel at the port of shipment
The most quoted rule in international trade, and the most frequently misapplied. The seller clears the goods for export and delivers them on board the vessel the buyer has nominated; risk passes at that point. It fits bulk and breakbulk cargo the seller can actually watch cross the rail. With containers, the seller loses physical control at the terminal gate, often several days before loading, and carries risk on cargo it can no longer see — FCA is the cleaner fit. FOB is still everywhere in Asian export contracts and letters of credit, so expect to negotiate rather than assume.
- Risk transfers: When the goods are on board the vessel at the named port of shipment.
- Insurance: Neither party is obliged
- Export clearance: Seller · Import clearance and duty: Buyer
- Typically used for: Bulk and breakbulk sea shipments, and buyers who want to control the ocean carrier.
- In depth:FOB in the glossary
CFR — Cost and Freight
Sea and inland waterway only · Delivery: On board at the port of shipment; seller pays freight to the named destination port
The seller books and pays the ocean freight to a named destination port, but risk transfers when the goods are loaded at origin. That split — cost to destination, risk from origin — is the most misunderstood feature of the C rules. A buyer on CFR terms who doesn’t insure the cargo is exposed for the whole ocean leg, even though the seller paid the freight. Destination terminal handling is the buyer’s unless the seller’s contract of carriage includes it, and import formalities remain the buyer’s.
- Risk transfers: When the goods are on board the vessel at the port of shipment — even though the seller pays the freight to destination.
- Insurance: Neither party is obliged
- Export clearance: Seller · Import clearance and duty: Buyer
- Typically used for: Sea shipments where the seller has better freight rates but the buyer will arrange its own insurance.
- In depth:CFR in the glossary
CIF — Cost, Insurance and Freight
Sea and inland waterway only · Delivery: On board at the port of shipment; seller pays freight and insurance to the named destination port
CFR plus a cargo insurance obligation. The seller must take out cover for the buyer’s benefit for at least 110% of the contract value, and under Incoterms 2020 the CIF minimum stayed at the restricted, named-perils level rather than moving to all-risks. If you want broad cover, write a higher level into the contract rather than relying on the default. Risk still passes at the origin port, and import clearance stays with the buyer.
- Risk transfers: When the goods are on board the vessel at the port of shipment.
- Insurance: Seller must insure — minimum cover, equivalent to Institute Cargo Clauses (C), for at least 110% of the contract value
- Export clearance: Seller · Import clearance and duty: Buyer
- Typically used for: Sea shipments where the buyer wants the seller to bundle freight and a basic insurance policy.
- In depth:CIF in the glossary
CPT — Carriage Paid To
Any mode · Delivery: Handover to the first carrier; seller pays carriage to the named destination
The multimodal equivalent of CFR. The seller contracts and pays carriage to a named destination, which can be an inland point rather than a port, but risk passes far earlier — when the goods are given to the first carrier in the chain. Name both the place of delivery and the destination in the contract to avoid arguments about where risk moved.
- Risk transfers: When the goods are handed to the first carrier — not at the destination the seller is paying to.
- Insurance: Neither party is obliged
- Export clearance: Seller · Import clearance and duty: Buyer
- Typically used for: Air, road, rail, or multimodal moves where the seller arranges transport to an agreed destination.
- In depth:CPT in the glossary
CIP — Carriage and Insurance Paid To
Any mode · Delivery: Handover to the first carrier; seller pays carriage and insurance to the named destination
CPT with insurance, and one of the key changes in the 2020 revision: the CIP insurance default was raised to all-risks level cover, while CIF stayed at the restricted level. That makes CIP the stronger choice for manufactured and high-value goods where the buyer wants real protection built into the seller’s obligations. Risk still passes at the first carrier, and import clearance remains the buyer’s.
- Risk transfers: When the goods are handed to the first carrier.
- Insurance: Seller must insure — all-risks level cover, equivalent to Institute Cargo Clauses (A), for at least 110% of the contract value
- Export clearance: Seller · Import clearance and duty: Buyer
- Typically used for: High-value manufactured goods on any mode where broad cargo insurance matters.
- In depth:CIP in the glossary
DAP — Delivered at Place
Any mode · Delivery: Named destination — often the buyer’s door
The seller carries cost and risk all the way to a named place in the buyer’s country and delivers the goods ready to be unloaded. Unloading is the buyer’s job, as is import clearance and payment of duties and taxes. DAP is the natural choice when a seller wants to offer door delivery without taking on the buyer’s import obligations, which usually require a locally established company.
- Risk transfers: At the named destination, with the goods ready for unloading from the arriving vehicle.
- Insurance: Neither party is obliged (the seller carries the risk, so usually insures its own interest)
- Export clearance: Seller · Import clearance and duty: Buyer
- Typically used for: Door delivery where the buyer is the importer of record.
- In depth:DAP in the glossary
DPU — Delivered at Place Unloaded
Any mode · Delivery: Named destination, unloaded
The only rule under which the seller must unload at destination. Renamed in the 2020 revision from DAT (Delivered at Terminal) so that the destination is no longer restricted to a terminal — it can be any agreed place with unloading capability. The seller should commit to DPU only where it can actually organize unloading; otherwise DAP is the safer way to write the same deal. Import clearance and duties stay with the buyer.
- Risk transfers: At the named destination, once the goods have been unloaded from the arriving vehicle.
- Insurance: Neither party is obliged (the seller carries the risk to the destination)
- Export clearance: Seller · Import clearance and duty: Buyer
- Typically used for: Deliveries to terminals, warehouses, or sites where the seller controls the unloading.
- In depth:DPU in the glossary
DDP — Delivered Duty Paid
Any mode · Delivery: Named destination, duties and import formalities settled
The maximum obligation on the seller: everything through to the buyer’s door, including import clearance and the duties and taxes owed there. It is the only Incoterms rule that moves import duty off the buyer. In the United States the seller must act as importer of record, which generally requires a customs bond and either a U.S. presence or a party willing to take that role — one reason many DDP quotes quietly fall apart at the border. Where the buyer simply wants door delivery without customs work, DAP plus a clearance service is usually the cleaner structure.
- Risk transfers: At the named destination, with the goods ready for unloading.
- Insurance: Neither party is obliged (the seller carries the risk to the destination)
- Export clearance: Seller · Import clearance and duty: Seller
- Typically used for: Samples, small parcels, and buyers who cannot or will not act as importer of record.
- In depth:DDP in the glossary
Who buys the ocean freight and the insurance. Under FOB the buyer books and pays the ocean freight and decides whether to insure; under CIF the seller books and pays the freight to the named destination port and buys minimum cargo insurance for the buyer. Risk passes at the same point under both, when the goods are on board the vessel at the port of shipment, so a CIF buyer is already carrying the risk during the voyage. Both are sea-only rules.
In our experience, FOB is the most common starting point for containerized ocean cargo: the Indian exporter clears the export and loads at the port, and the US buyer books the freight through its own forwarder. FCA is the technically better fit for containers. CIF suits exporters who want to control the booking, DAP gives the buyer a delivered price while keeping the US customs entry with the buyer, and DDP works only if the seller can act as US importer of record.
No. US transaction value is the price actually paid or payable for the goods, which the statute defines as excluding the costs of transportation, insurance and related services for the international shipment to the United States (19 U.S.C. 1401a(b)(4)(A); 19 CFR 152.102(f)). An FOB price already excludes them. On a CIF or CFR price they are deducted at entry, using the actual amounts rather than estimates.
The Importer Security Filing belongs to the ISF Importer, which 19 CFR 149.1 defines as the party causing the goods to arrive in the United States by vessel, or its agent. On an ordinary FOB or CIF purchase that is the US buyer, whose forwarder or broker files it. The Incoterm changes who holds the booking data: under CIF the seller’s forwarder has it, so agree in advance who sends the data elements, most of which are due 24 hours before loading at the foreign port (19 CFR 149.2(b)).
Seven work for any mode of transport — EXW, FCA, CPT, CIP, DAP, DPU, and DDP. Four are for sea and inland waterway only — FAS, FOB, CFR, and CIF. The comparison table on this page shows, for each one, who handles export clearance, main carriage, insurance, and import clearance, and where risk transfers.
Four main things. DAT was renamed DPU (Delivered at Place Unloaded), so the destination no longer has to be a terminal. The insurance defaults split: CIP rose to all-risks cover while CIF stayed at the restricted level. FCA gained an option for an on-board bill of lading to be issued to the seller. And the rules were rewritten to allocate costs and security-related obligations more clearly.
FCA is the better technical fit. Under FOB, risk passes only once the goods are on board, but a container leaves the seller’s hands at the terminal gate days earlier — so the seller carries risk on cargo it can no longer see. FCA sets delivery where the handover actually happens. FOB is still the market norm in much of Asia, so expect to negotiate rather than assume FCA.
Only CIF and CIP. CIF requires minimum, restricted cover; CIP requires all-risks cover. Both are for at least 110% of the contract value, and both can be raised by agreement. Under the other nine rules neither party has to insure, so whoever carries the risk at each point should arrange their own cargo policy.
The buyer, under every rule except DDP. Duties, taxes, and import clearance follow the importer of record, and only Delivered Duty Paid moves that job to the seller. Estimate the duty with our free tariff simulator — it depends on HTS classification, origin, and customs value, not on the trade term.
Because DDP makes the seller responsible for the U.S. import entry. That generally means acting as importer of record, with a customs bond and full compliance exposure — hard for a foreign seller with no U.S. presence. DAP plus a clearance service usually gets the same commercial result, with the buyer correctly named as importer. We arrange entries through our licensed customs broker network either way.
No. Incoterms rules cover delivery, who pays which costs, and when risk transfers. Title, payment terms, remedies for breach, and governing law all belong in the sales contract, whatever rule you choose. It is common — and entirely valid — for risk to have passed while title has not.
Write the three-letter code, the named place in full, and the edition — for example "CIP Chicago O’Hare Airport, Incoterms 2020" or "FCA 14 Industrial Road, Ho Chi Minh City, Incoterms 2020." A bare code with no place is the most common source of disputes, because the rule alone cannot tell you where delivery happened.
More free shipping tools
Search the ocean freight rates carriers publish by lane and equipment type (availability varies).
Upcoming sailings and transit times between two ports, by departure or arrival date.
Carrier services, sailings, vessels and transit times on every Airlift lane, port pair by port pair.
Typical, schedule-dependent transit days for a port pair from live carrier sailings.
Track a container or house B/L on any Airlift booking, with a page per carrier for the number formats and statuses.
Check an air waybill number, find the airline from its 3-digit prefix and open the airline's own cargo tracker.
The UN/LOCODE of any seaport, with a page for the busiest ports and the CBP Schedule D directory for US ports of entry.
Every US port of entry by customs district: the four-digit code that goes on Form 7501.
IATA and ICAO codes for 3,250 airports, with the CBP port-of-entry code for US airports and an air freight quote.
Search the Harmonized Tariff Schedule by product, HTS code or six-digit HS code, then send the line to the import duty calculator.
Find the 10-digit Schedule B number for your EEI filing with the Census search, and when an export needs EEI.
Every antidumping and countervailing duty order in force, by product, country or case number.
Inside size, door opening, CBM, tare and payload for dry, high cube, reefer, open top and flat rack containers.
Total CBM, air volumetric and DIM weight (kg or lb), LCL revenue tons and chargeable weight from your piece dimensions and weights.
Estimate how many cartons fit a 20′, 40′, 40′ HC or 45′ HC, with the container specs.
Estimate import duty, Section 301 and 232 tariffs, MPF, HMF and customs landed cost by HTS code and origin.
What the 10% Section 122 surcharge cost you entry by entry, and where the filing windows stand.
Ask the customs team to review your entries for an IEEPA tariff refund.
Free duty API and an embeddable landed-cost widget for your own site.
The public JSON behind Sealanes and a dependency-free MCP server for it.
Negotiating terms with a supplier? Talk to a freight expert before you sign — we handle both ends of the move and file entries through our licensed customs broker network. Paying or selling by letter of credit? The transport document has to match the credit's wording, so the term and the named place matter most there.
Incoterms® is a registered trademark of the International Chamber of Commerce. This page is our own plain-English summary, not the ICC text; for the official rules and guidance notes, see the ICC's Incoterms 2020 page. US customs sources: 19 U.S.C. 1401a (value), 19 U.S.C. 1484 (importer of record), 19 CFR 152.102–152.103 and 19 CFR part 149 (ISF).