INCOTERMS

What Are Incoterms?

Incoterms is the abbreviation for International Commercial Terms, a set of standardized rules that regulate various aspects of international trade.

These terms are crucial as they clearly define the allocation of risks, costs, and responsibilities between the buyer and the seller in an international sales contract. It is important to note that Incoterms are not mandatory regulations but rather a framework designed to facilitate understanding between the parties involved.

Currently, there are 11 Incoterms. Since January 2020, a new version has been in effect, maintaining the same number of terms as the previous edition (Incoterms 2010). Below, we will explore the updated Incoterms 2020 table.

Incoterms 2020 Table

As you may know, a new version of Incoterms 2020 was globally released in September 2019 and officially came into effect on January 1, 2020.

With this update, the types of Incoterms were revised. Below is the list of Incoterms 2020, which define the responsibilities of each party in a commercial transaction:

1. EXW

— Ex Works (EXW) — At Origin (Named Place of Delivery);

2. FCA

— Free at Carrier (Named Place of Delivery);

3. FAS

— Free Alongside Ship (FAS) — Free Alongside the Ship (Named Port of Shipment);

4. FOB

— Free on Board (Named Port of Shipment);

5. CPT

— Carriage Paid To (Named Place of Destination);

6. CIP

Carriage and Insurance Paid To (Named Place of Destination);

7. CFR

— Cost and Freight (Named Port of Destination);

8. CIF

Cost Insurance And Freight — Custo, Seguro E Frete (porto de destino nomeado);

9. DAP

— Delivered at Place (Named Place of Destination);

10. DPU

— Delivered at Place Unloaded (Named Place of Destination);

11. DDP

— Delivered Duty Paid (Named Place of Destination);

It is important to clarify that there is no Incoterms 2025 version. The latest available revision is Incoterms 2020, which will remain in effect and continue to be used in 2025.

FAQ: Frequently Asked Questions

What is the purpose of Incoterms?

The Purpose of Incoterms

The function of Incoterms is to define the rights and obligations of both the exporter and importer, establishing the responsibilities and duties between the buyer and the seller. Below are the key functions of Incoterms:

Determine the place where the exporter must deliver the goods.
Specify who is responsible for paying international freight.
Clarify who must handle and pay for export and import formalities.
Define who is responsible for contracting and paying for cargo insurance.
Establish the risk limits for both the buyer and seller.

Now that you understand the functions of Incoterms, let’s explore the most commonly used terms in international trade.

What Are the Groups of Incoterms?

Incoterms are divided into four groups (E, F, C, and D), categorized based on the responsibilities and costs assigned to the buyer and seller in an international trade transaction.

There is no Incoterms 2025 version.

There are 11 Incoterms used in 2025, as outlined in the Incoterms 2020 edition, which remains in effect.

What are the most commonly used Incoterms?

The most commonly used Incoterms in exports and imports are EXW, CIF, FOB, and FCA.

What are the maritime Incoterms?

The maritime Incoterms are:
✅ FAS (Free Alongside Ship)
✅ FOB (Free On Board)
✅ CFR (Cost and Freight)
✅ CIF (Cost, Insurance and Freight)

These Incoterms are used exclusively for maritime transport.

How many and what are the Incoterms?

Currently, in the Incoterms 2020 version, there are 11 terms. They are:

EXW
FCA
FAS
FOB
CPT
CIP
CFR
CIF
DAP
DPU
DDP

Incoterm DPU (New)

The DPU (Delivered at Place Unloaded) Incoterm replaces the former DAT (Delivered at Terminal), which has been removed.

In summary, under this term, the seller delivers the goods to the buyer at the named destination, unloaded from the mode of transport. The seller assumes all risks and costs until the cargo is made available to the buyer at the designated location. This includes the responsibility for unloading operations, which are carried out at the seller’s expense and risk.

Transport and Insurance

Under DPU, the seller arranges and pays for the transportation of the goods from the place of origin to the destination.
However, the seller is not obligated to purchase insurance for the shipment.

Key Aspects

✅ DPU is the only Incoterm where the seller is required to unload the goods at the place of delivery.
✅ The seller is responsible for export customs clearance where applicable.
✅ However, the seller does not cover import costs or customs procedures in the buyer’s country or any third-country transit.

INCOTERMS by Mode of Transport

Incoterms can be categorized into two groups based on the mode of transport:

Multimodal Transport (Applicable to All Modes)

✅ EXW (Ex Works)
✅ FCA (Free Carrier)
✅ CPT (Carriage Paid To)
✅ CIP (Carriage And Insurance Paid To)
✅ DAP (Delivered At Place)
✅ DPU (Delivered At Place Unloaded)
✅ DDP (Delivered Duty Paid)

Waterway Transport (Maritime or Inland, Usually Fluvial)

✅ FAS (Free Alongside Ship)
✅ FOB (Free On Board)
✅ CFR (Cost And Freight)
✅ CIF (Cost, Insurance And Freight)

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