Incoterms 2020, explained simply.

FOB, CIF, DDP and the rest decide who pays for carriage and who carries the risk. Here's a plain-English rundown of all 11 Incoterms 2020 and how to choose.

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What are Incoterms?

Incoterms 2020 are the International Chamber of Commerce's standard rules that split responsibility between buyer and seller: who arranges and pays for carriage, where risk transfers, and who handles export/import formalities. Getting the term right avoids costly misunderstandings.

The 11 Incoterms 2020

Term	Mode	Pays main carriage	Risk transfers
EXW	Any	Buyer	At seller's premises
FCA	Any	Buyer	When handed to carrier
FAS	Sea	Buyer	Alongside the ship
FOB	Sea	Buyer	On board the vessel
CFR	Sea	Seller	On board (risk), freight paid
CIF	Sea	Seller	On board; freight + insurance paid
CPT	Any	Seller	When handed to carrier; freight paid
CIP	Any	Seller	To carrier; freight + insurance paid
DAP	Any	Seller	At named place, not unloaded
DPU	Any	Seller	At named place, unloaded
DDP	Any	Seller	Delivered, duties paid

Summary for orientation; always confirm the exact obligations in the official ICC Incoterms 2020 text and your sales contract.

Which one should you use?

As a rule of thumb: EXW gives the seller least involvement, DDP the most; FOB/CFR/CIF are the workhorses of sea trade. The right choice balances control, cost visibility and risk. Our freight forwarding team will recommend the term that fits your shipment and quote accordingly — get a quote. Unfamiliar terms are in the glossary.

FAQ

Questions, answered

What are Incoterms?

Incoterms (International Commercial Terms) are standard three-letter rules, published by the ICC, that define who is responsible for cost, risk and formalities at each stage of an international shipment. Incoterms 2020 is the current version.

Which Incoterm is best for a Pakistani exporter?

It depends on how much of the journey you want to control and cost in. FOB and CFR/CIF are common for sea exports; EXW puts most responsibility on the buyer; DDP puts the most on the seller. We'll advise the right term for your deal.

Do Incoterms cover payment or title?

No — Incoterms cover delivery, risk transfer and who arranges/pays for carriage and formalities. They do not govern payment terms or transfer of ownership; those sit in your sales contract.

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