Key Shipping Terms in International Trade
For businesses engaged in cross-border trade, the correct application of shipping terms is fundamental to managing contractual risk, controlling landed costs, and maintaining operational transparency. Incoterms® 2020, developed by the International Chamber of Commerce (ICC), provide a globally recognised framework defining the responsibilities of buyers and sellers across international trade transactions.
Incoterms® 2020 Rules
Governing Body Since 1936
Current Edition in Force
When properly applied, Incoterms® reduce contractual disputes, improve transparency, and support more predictable logistics operations. They define several critical elements of each shipment:
Who arranges and pays for transportation
Where risk transfers from seller to buyer
Responsibility for export and import customs clearance
Allocation of duties, taxes, and insurance costs
The seller makes goods available at their premises. The buyer assumes full responsibility for the shipping process, including collection, export clearance, transportation, and risk management from that point forward.
Applicable to all modes of transport.
The seller delivers and loads the goods onto the named vessel at the port of shipment. Risk transfers to the buyer once the cargo is on board. FOB is one of the most widely used terms in ocean freight.
Sea and inland waterway transport only.
The seller pays freight costs to the destination port; however, risk transfers to the buyer once the cargo is loaded at the origin port. The buyer is responsible for insurance from that point.
Sea and inland waterway transport only.
The seller arranges and bears the cost of transportation to a named destination. The buyer remains responsible for import clearance, duties, and taxes upon arrival.
Applicable to all modes of transport.
DDP places maximum contractual responsibility on the seller, who manages transportation, export and import customs clearance, and payment of all applicable duties and taxes prior to delivery at the named place.
Applicable to all modes of transport.
The seller delivers the goods to a named carrier or nominated party at a specified location. Risk transfers to the buyer at that point. FCA is suitable for containerised and multimodal shipments where FOB is often misapplied.
Applicable to all modes of transport.
Incorrect application of Incoterms® can result in unexpected landed costs, operational delays, or contractual disputes. Working with experienced logistics professionals ensures the correct and consistent application of these rules across your international supply chain — supporting more contractually defensible and operationally predictable global shipping.
Our team provides structured consultation to help you select, apply, and document the correct Incoterms® for your trade agreements and supply chain requirements.
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