Overview of the Incoterms Rules

During our GDP seminars, we sometimes receive questions about the Incoterms. This article, therefore, provides you with an overview of the Incoterms 2020 and their meaning.

History of Incoterms

Incoterms is the abbreviation for International Commercial Terms.

The Incoterms are published by the International Chamber of Commerce (ICC) in Paris. The first version was published in 1936. Over the years, the rules have been updated several times. The current version of the Incoterms is indicated by the year. With the latest revision, the ICC has once again revised the clauses and adapted them to current trade practices. This latest version, the Incoterms 2020, came into force on 01 January 2020.

Validity of Incoterms

The Incoterms do not have the force of law and are not mandatory rules. They are regarded as general terms and conditions. They only apply if they are expressly included in the respective contract by the buyer and seller.

The 11 Incoterms 2020 Rules

According to Incoterms 2020, there are 11 different rules:

• EXW – Ex Works
• FCA – Free Carrier
• FAS – Free Alongside Ship
• FOB – Free On Board
• CFR – Cost and Freight
• CIF – Cost, Insurance and Freight
• CPT – Carriage Paid To
• CIP – Carriage, Insurance Paid To
• DAP – Delivered At Place
• DPU – Delivered At Place Unloaded
• DDP – Delivered Duty Paid

On the one hand, a classification can be made according to the mode of transport, whereby there are two type:

• Incoterms that apply to any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU, DDP)
• Incoterms that apply to sea and inland waterway transport only (FAS, FOB, CFR, CIF)

On the other hand, a classification can also be made into four groups, whereby the individual groups are characterised by the fact that the cost and risk bearing within the group is designed according to the same basic principle:

• Group E – Departure (EXW)
• Group F – Main Carriage Unpaid (FCA, FAS, FOB)
• Group C – Main Carriage Paid (CFR, CIF, CPT,CIP)
• Group D – Arrival (DAP, DPU, DDP)

The following table provides a summary overview:

Related links

For further information, please visit the ICC website: International Chamber of Commerce (ICC).

The ICC also offers a free ICC Incoterms 2020 app.