Understanding Incoterms 2020

This article is written for logistics and supply chain teams who need practical guidance they can apply directly to real shipments.

📅 February 1, 2024

Incoterms define the responsibilities of buyers and sellers in international transactions. Understanding them is crucial for managing costs and risks.

Common Incoterms Explained

EXW (Ex Works)

Seller makes goods available at their premises. Buyer handles all transport and risk.

FOB (Free on Board)

Seller delivers goods on board the vessel. Risk transfers once goods are loaded.

CIF (Cost, Insurance, Freight)

Seller pays for transport and insurance to the destination port. Risk transfers at origin port.

DDP (Delivered Duty Paid)

Seller handles everything including customs clearance at destination.

Key takeaways

Clarify responsibilities early between shipper, consignee, logistics provider, and any brokers involved.
Confirm documentation requirements and data accuracy before cargo is packed, not at the terminal gate.
Use tracking and status updates as a coordination tool, adding context and next steps instead of one-word statuses.