International Commercial Terms ("Incoterms") are the three-letter trade terms published by the International Chamber of Commerce (ICC) to clearly communicate the costs, risks, and responsibilities of moving goods between a seller and buyer. First set in 1936 and updated over the decades (1953, 1967, 1976, 1980, 2000, 2010, 2020), the current Incoterms 2020 defines 11 rules in two categories by mode of transport. Choosing the right one decides who pays for what and where risk transfers.
The obligation ladder
Incoterms 2020 obligation ladder: eleven rules from EXW (least seller obligation) to DDP (most), with the point of risk transfer for each.
Ranked from least to most seller obligation: EXW → FCA → FAS → FOB → CFR → CPT → CIF → CIP → DPU → DAP → DDP.
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Incoterms 2020 Explained: All 11 Rules
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