Incoterms (International Commercial Terms) are the globally recognized rules that define the responsibilities of buyers and sellers in international trade. Published by the International Chamber of Commerce, the 2020 edition contains 11 rules.
Key Groups of Incoterms 2020
Rules are divided into two groups. First, rules for any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU and DDP. Second, rules for sea and inland waterway transport only: FAS, FOB, CFR and CIF.
Which Incoterm Should You Choose?
If you are buying goods and want full control over shipping, FOB or FCA keeps transport costs in your hands. If you prefer the seller to manage everything up to your door, DAP or DDP is more convenient, but usually comes at a higher price.
Common Mistakes
Many buyers assume insurance is included in CIF and CIP, but CIP requires higher insurance cover under Incoterms 2020. Always clarify who clears export and import customs, and make sure the chosen term matches your risk appetite.
At FuYu Trade, our experts help you choose the right Incoterm and ensure contracts are crystal clear before you commit. Contact us for guidance on your next deal.
