Incoterms
Incoterms 2020 explained for small exporters
Who pays freight, insurance and duty — and where the risk moves — under EXW, FCA, FOB, CIF, DAP and DDP.
7 min read
Why Incoterms matter
An Incoterm is a three-letter rule in your sales contract that says who arranges and pays for each part of the journey, and where the risk of loss passes from seller to buyer.
The ones you'll use most
EXW — the buyer does almost everything, including export clearance. Simple for you, often hard for the buyer.
FCA — you hand the goods to the buyer's carrier, export-cleared. The best default for air and container shipments.
FOB / CIF — sea-only terms. Use them for bulk or non-containerised cargo loaded on board a vessel.
DAP — you deliver to the buyer's door; the buyer pays import duty and VAT.
DDP — you pay everything, including the buyer's import taxes. Only use it if you can register for import in the destination.
A simple rule
Air or containers: pick FCA, CPT or CIP. Sea bulk: FOB or CIF. Selling online to consumers abroad: DAP or DDP.
Put this guide to work
General guidance only — confirm rates and requirements with a customs broker for your shipment.