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What You Need to Know About Incoterms® 2020

Jan 15, 2020

With the recent release of Incoterms® 2020 we thought it would be helpful to our suppliers and buyers alike to review the basics of what Incoterms are, how they have changed in 2020, and how to use them properly.

What are Incoterms?

Incoterms are a series of terms published by the International Chamber of Commerce that relate to international commercial law and are used in international commercial transactions while exporting and importing products.

You can learn more about the history of Incoterms on the Incoterms® rules history page on the ICC website to get a better understanding of the background and depth of the terms.  Also check out the helpful infographic from the ICC below.

ICC Incoterms Infographic
(Click to Enlarge)

There are currently a total of 11 Incoterms in use, each starts with one of 4 letters, E, F, C, or D and describes a unique point in the international shipment process.

Group E – Departure  

  • EXW - Ex Works

Group F – Main Carriage Unpaid

Any F term means the product has still not left the U.S. but has moved beyond the point of origin.

  • FCA - Free Carriage
  • FAS - Free Alongside
  • FOB - Free on Board

Group C – Main Carriage Paid

Port to port freight transaction.

  • CPT - Carriage Paid To
  • CIP - Carriage and Insurance Paid
  • CFR - Cost and Freight
  • CIF - Cost Insurance and Freight

Group D – Arrival

Once it has arrived at the port of import and been taken off the mode of transport (ship, plane, truck, train) it moves to Group D.

  • DAP - Delivered At Place
  • DPU* - Delivered at Place Unloaded – the only new term in 2020
  • DDP - Delivered Duty Paid

Why Are Incoterms Important?

Incoterms                                     


As any experienced exporter will know, nothing gets export or imported without a request for quotation; it has to move between an origin and a destination and that’s why trade terms are so important. Incoterms help to divide and clarify the cost, roles, and liabilities that both the buyer and sellers are agreeing to take on in an international agreement.

It is extremely important that those using Incoterms fully understand them and use them properly.  Not all buyers/sellers will have the same level of understanding of Incoterms, so you might need to help the other party of your transaction to understand the rules.

As of January 1,2020 the only set of trade terms in force is Incoterms® 2020, and they should be the only set of trade terms that are used.

What’s New in Incoterms® 2020?

As the industry evolves so do the terms that are required, so the ICC publishes a new and updated list of terms once every 10 years.  As of January 2020 there is a new list in effect. You can find out more about the updates and a link to buy the full book on the ICC’s page about Incoterms® 2020.

Not a whole lot of changes were made from the Incoterms® 2010 to Incoterms® 2020, but the ICC clearly put a lot of effort into making the rules clearer, more streamlined, and easier to understand than ever before. 

For all the details on the changes made to Incoterms®2020 and how they impact your business check out our recent recorded webinar “What’s New? Incoterms 2020” presented by Food Export Helpline™ Counselor Dennis Lynch (please note you will need a Food Export login to access this webinar).

Incoterms Webinar

In this educational webinar, Dennis covers many of the changes and impacts that came with Incoterms®2020 and it is extremely helpful at helping small and medium U.S. suppliers understand what they need to know moving forward in 2020. Dennis also answered some recent questions about Incoterms®2020 in the Ask Dennis section of the 2019 November E-Bulletin.