Pick the right Incoterms 2020 rule for your shipment

Sea freight, China to the US, seller pays freight and insurance

With mode = sea, seller in CN, buyer in US, seller paying the main carriage and insurance, and the buyer clearing import, the tool recommends CIP (Carriage and Insurance Paid To) with CIF as runner-up. Both bundle freight and insurance into the seller's price, but the dataset encodes two real differences: CIP's default insurance cover is ICC Clauses A (all-risks) — raised from minimum cover by the 2020 revision — while CIF still defaults to minimum-cover ICC Clauses C; and CIP works for any transport mode, whereas CIF is restricted to sea and inland waterway. For containerised sea cargo the scoring also applies a small penalty to the maritime-only family, which is why CIP edges out CIF here.

Door-to-door sale where the seller absorbs import duties

Pick multimodal transport with the seller paying freight and handling both export and import clearance and the verdict is DDP (Delivered Duty Paid). DDP is the only rule of the 11 where the seller clears import and pays import duties and taxes; in the cost-split table, 10 of the 11 cost lines sit with the seller — only unloading at the buyer's premises stays with the buyer. The caution shown next to the verdict is not boilerplate: DDP makes the seller responsible for import VAT and customs formalities in the buyer's country, which is usually only workable with a local tax registration or a fiscal representative.

Container shipment where the buyer books the ocean leg

With mode = sea, the buyer paying the main carriage and arranging their own insurance, and the seller clearing export only, the tool recommends FCA (Free Carrier) with FOB (Free on Board) as runner-up. The two rules assign all 11 cost lines identically — seller covers export packing, origin loading, pre-carriage and export clearance; buyer pays everything from the main carriage onwards. The difference is the risk transfer point: FOB transfers risk when goods are loaded on board the vessel, FCA when goods are handed to the buyer's nominated carrier. Containers are handed over at terminal yards days before vessel loading, which is why the ICC recommends FCA over FOB for containerised cargo — and why the scoring carries an 8-point penalty on the sea-only family.

What is the difference between CIF and CIP?

Both make the seller pay freight and insurance to destination while risk transfers at origin, but they differ on three points from ICC Publication 723E (in force since January 1, 2020). First, scope: CIF only applies to sea and inland-waterway transport, CIP to any mode including multimodal container moves. Second, insurance level: the 2020 revision raised CIP's default cover to ICC Clauses A (all-risks), while CIF kept minimum-cover ICC Clauses C — a deliberate split, because CIF is used heavily in commodity bulk trades where minimum cover is market practice. Third, risk transfer: under CIF risk passes when goods are on board the vessel; under CIP it passes when goods are handed to the first carrier, which can be a trucker at the seller's door. For containerised or high-value cargo, CIP with its all-risks default is usually the better fit. Dataset last verified 2026-06-09.

Can I use FOB for container shipments?

You can write FOB into a contract for containers, but the ICC explicitly recommends FCA instead, and this tool's scoring follows that guidance. The problem is a risk gap: FOB transfers risk when goods are loaded on board the vessel, yet containers are handed over at the terminal yard days earlier. Between gate-in and vessel loading the cargo sits at the seller's risk under FOB even though it is already out of the seller's control. FCA closes that gap by transferring risk at the handover to the buyer's nominated carrier. FCA 2020 also added an optional on-board bill of lading mechanism for letter-of-credit financing, removing the historical reason exporters clung to FOB.

Who pays import duties and taxes under DAP, DPU and DDP?

Under DAP and DPU the buyer handles import clearance and pays import duties and taxes — the seller delivers to the named destination but stops short of customs. Under DDP the seller does it all: import clearance, duties and taxes are all seller cost lines in the ICC obligations matrix, making DDP the only one of the 11 rules with that allocation. That is also DDP's trap: paying import VAT in the buyer's country often requires the seller to register for tax there or appoint a fiscal representative, so DDP is best reserved for sellers with an existing footprint in the destination market.

What is the difference between DAP and DPU?

One word: unloading. Under DAP (Delivered at Place) the seller delivers goods ready for unloading on the arriving transport, and the buyer unloads at their own cost and risk. Under DPU (Delivered at Place Unloaded) the seller must also unload — it is the only Incoterm 2020 rule that obliges the seller to unload at destination. Pick DPU only when the seller genuinely controls unloading equipment at the named place (a terminal, warehouse or yard); if the seller cannot guarantee that, ICC guidance is to stay with DAP.

Why does the ICC advise against EXW for international shipments?

Under EXW the seller only makes goods available at their premises — not even loaded — and the buyer becomes responsible for export clearance in a country where they are usually not resident. Many customs regimes expect the exporter of record to be established locally, so a foreign buyer can struggle to file the export declaration, obtain licences or produce proof of export for the seller's VAT zero-rating. ICC guidance since the 2020 edition is to use FCA for international pickups: the seller clears export and risk still transfers at origin. This tool encodes that guidance as a scoring penalty on cross-border EXW scenarios.

Are Incoterms 2010 still valid in 2026?

Yes — Incoterms editions do not expire. If your contract explicitly says "FOB Incoterms 2010", the 2010 text governs. Incoterms 2020 (ICC Publication 723E) has been the current edition since January 1, 2020, and as of our last dataset review on 2026-06-09 the ICC has not published a successor edition. New contracts should reference Incoterms 2020 explicitly, including the edition year and the named place or port — the main 2010→2020 changes were DAT becoming DPU, the CIP insurance default rising to ICC Clauses A, and the FCA on-board bill of lading option.

Do Incoterms decide when ownership of the goods transfers?

No. Incoterms 2020 allocates risk of loss or damage, cost responsibility, and tasks such as customs clearance and insurance between seller and buyer — it deliberately does not govern transfer of title, payment terms, remedies for breach, or what happens if the goods are defective. Those belong in the sales contract and its governing law. A shipment can be at the buyer's risk under CPT while the seller still owns the goods through a retention-of-title clause. Treat the Incoterm as the logistics and risk layer of the contract, not as the whole contract.