Incoterms 2020 explicados

What Incoterms are

Incoterms are standard trade terms published by the International Chamber of Commerce. The current edition is Incoterms 2020. Each rule is a three-letter code that tells both sides who does what in the delivery of goods: who contracts and pays for transport, who handles export and import clearance, who insures, and at which point the risk of loss or damage moves from seller to buyer.

They are a shared vocabulary, not law. They apply to a contract only when the parties say so, so the contract should state, for example, that it follows Incoterms 2020.

What they do not cover

Incoterms are narrower than many people expect. They do not decide:

• The price, or when and how payment is made.
• When ownership of the goods passes to the buyer.
• What happens if the contract is breached, or which law and court apply.
• The quality specification of the goods.

The two groups

Four rules suit sea and inland waterway cargo only: FAS, FOB, CFR and CIF. They refer to the ship and are the classic choice for bulk cargo such as grain, ore, coal or liquids loaded straight onto a vessel. Seven rules suit any mode of transport, including containers moved by truck, rail or air: EXW, FCA, CPT, CIP, DAP, DPU and DDP.

The eleven rules in plain language

Why the named place matters

A bare code is incomplete. FOB alone does not tell you which port, and the cost difference between two ports can be large. The place also fixes the exact point where risk moves. Write the most precise place you can, for example a named terminal or berth rather than only a city. For bulk cargo, also say who is responsible for loading costs, trimming and port charges, because the rules do not spell out every local practice.

Choosing a rule in practice

• A buyer with its own freight contracts and sea experience often prefers FOB, to control shipping.
• A buyer who wants a landed price and fewer moving parts often prefers CFR or CIF, and the seller manages the voyage.
• Containerised cargo that is handed to a carrier at an inland depot suits FCA or CPT better than FOB.
• DAP and DDP suit buyers who want a delivered price, and they need a seller who can handle import formalities.

Common mistakes

• Using FOB, CFR or CIF for containers that are handed over before loading on a vessel. Rules written for other modes fit better.
• Assuming the seller owns the cargo risk until arrival under CIF. Risk passes at loading.
• Leaving out the edition. Say Incoterms 2020 to avoid confusion with older versions.
• Treating the Incoterm as the price. The same price means something different under FOB and under CIF.

Compare the rules side by side

The Incoterms table on Tonport sets the rules next to each other, and the landed cost calculator shows how the choice changes the cost per ton at your destination.

Preguntas frecuentes

Which Incoterm is best for bulk commodities?

FOB and CFR or CIF are the traditional choices for bulk cargo on vessels. The right one depends on who is better placed to arrange shipping and who wants to control it.

Does CIF mean the seller is responsible until the cargo arrives?

No. Under CIF the seller pays freight and buys insurance, but risk passes to the buyer once the goods are loaded on board at the port of shipment.

Are Incoterms legally binding?

They bind the parties only when the contract incorporates them. They are an international standard of terms, not a law, and they work together with the contract and the applicable law.

What changed in Incoterms 2020?

Among other updates, DAT became DPU, CIP now requires the broader insurance cover, and FCA gained an option related to bills of lading with an on-board notation. Check the full text of the rules for details.