Introduction
In global commerce, clear rules are essential to prevent misunderstandings between buyers and sellers. That’s where Incoterms® come in—standardized international commercial terms published by the International Chamber of Commerce (ICC). The latest version, Incoterms® 2020, provides a legal framework for delivery responsibilities, cost-sharing, and risk transfer in both sea and multimodal transport.
Whether you are a manufacturer, trader, freight forwarder, or importer/exporter, understanding Incoterms is critical for setting accurate expectations and preventing disputes.
What Are Incoterms®?
Incoterms® (International Commercial Terms) are globally accepted legal rules that define:
- Who pays for what (shipping, insurance, customs, etc.)
- Where the risk shifts from seller to buyer
- Who handles transportation and export/import duties
They are not contracts but become part of a contract when referred to, such as:
“FOB Mersin Port, Incoterms® 2020”
Classification of Incoterms®
Incoterms are divided into two main categories:
- Rules for Any Mode of Transport (Multimodal)
- Rules for Sea and Inland Waterway Transport Only
Group 1: Incoterms for All Transport Modes (Air, Land, Sea, Rail)
1. EXW – Ex Works (Named Place of Delivery)
- Seller: Makes goods available at their premises
- Buyer: Bears all costs and risks from pick-up onwards
- Risk Transfer: At seller’s gate
2. FCA – Free Carrier (Named Place)
- Seller: Delivers goods to carrier at named place
- Buyer: Handles main transport, risk starts at loading
- Use Case: Freight forwarders or container shipment
3. CPT – Carriage Paid To (Named Destination)
- Seller: Pays transport to agreed point
- Buyer: Bears risk once goods are with the first carrier
4. CIP – Carriage and Insurance Paid To (Named Destination)
- Like CPT, but seller must also insure goods
- Minimum insurance (ICC-C); buyer may request upgrade
5. DAP – Delivered at Place
- Seller: Delivers to buyer’s location (not unloaded)
- Buyer: Pays for unloading and import clearance
- Risk: Until arrival
6. DPU – Delivered at Place Unloaded
- Similar to DAP, but seller unloads goods at destination
- First introduced in Incoterms 2020
7. DDP – Delivered Duty Paid
- Seller: Covers all costs, including import duty & VAT
- Buyer: Only receives goods
- Most seller-heavy term
Group 2: Incoterms for Sea and Inland Water Transport Only
8. FAS – Free Alongside Ship (Named Port)
- Seller: Delivers alongside vessel at port
- Buyer: Loads and arranges shipment
- Often used for bulk commodities
9. FOB – Free on Board (Named Port)
- Seller: Loads goods onto ship
- Buyer: Takes risk once on board
- Classic sea freight term
10. CFR – Cost and Freight (Named Port)
- Seller: Pays freight to destination
- Buyer: Bears risk once goods are loaded
11. CIF – Cost, Insurance and Freight (Named Port)
- Like CFR, but seller provides minimum insurance
Comparison Table: Seller and Buyer Responsibilities
Table 1: Risk, Cost, and Delivery Point Overview
| Incoterm | Seller Pays Freight | Seller Pays Insurance | Risk Transfers At | Used For |
|---|---|---|---|---|
| EXW | ❌ | ❌ | Seller’s premises | Domestic pickup |
| FCA | ❌ | ❌ | Carrier location | Multimodal |
| CPT | ✅ | ❌ | First carrier | Containers |
| CIP | ✅ | ✅ | First carrier | High-value goods |
| DAP | ✅ | ❌ | Buyer’s location | Cross-border B2B |
| DPU | ✅ | ❌ | Destination, after unloading | Warehousing |
| DDP | ✅ | ✅ | Buyer’s door (after customs) | Turnkey imports |
| FAS | ❌ | ❌ | Ship’s side | Bulk cargo |
| FOB | ❌ | ❌ | On-board vessel | Traditional sea |
| CFR | ✅ | ❌ | On-board vessel | Commodity trades |
| CIF | ✅ | ✅ | On-board vessel | Marine insurance |
Key Changes in Incoterms® 2020
- DAT replaced with DPU (Delivered at Place Unloaded)
- Stronger insurance requirements under CIP
- Clarification on FCA with onboard BL issuance
- Improved structure, examples, and explanatory notes
How ATABAŞ GRUP Uses Incoterms®
At ATABAŞ GRUP, we implement Incoterms clearly in all offers and contracts. Depending on your preferences and local legal environment, we work under:
- FOB Mersin, for bulk and containerized shipments
- CFR or CIF, for port-to-port delivery
- DAP or DDP, for turnkey deliveries with customs support
- EXW, when you prefer full control over shipping
We guide clients through risk exposure, cost optimization, and document accuracy to ensure smooth international transactions.
Conclusion
Incoterms® 2020 brings clarity and standardization to international contracts. Choosing the right term can mean the difference between profit and dispute. Traders, shippers, and buyers must understand these terms deeply before quoting, contracting, or shipping.
Need help choosing the best delivery term? ATABAŞ GRUP is ready to guide and deliver with precision.