International price quotations follow the ICC’s Incoterms 2020. Seven terms work for any transport mode: EXW, FCA, CPT, CIP, DAP, DPU and DDP. Four are for sea and inland waterway only: FAS, FOB, CFR and CIF. Older terms such as DAF, DES, DEQ and DDU were withdrawn in 2010, and DAT was replaced by DPU in 2020.
When an Indian exporter quotes “$12 per piece FOB Mundra” to a buyer in Rotterdam, the three letters FOB settle a lot: who pays for loading, who pays the ocean freight, who insures the goods, and at what point the risk of damage passes from seller to buyer. These price quotation terms are called Incoterms, published by the International Chamber of Commerce (ICC).
The current version is Incoterms 2020, in force since 1 January 2020. Many textbooks still list older terms such as DAF, DES, DEQ and DDU. Those were dropped in the 2010 revision, and quoting them today invites confusion. Here are the 11 terms in use now.
Terms for Any Mode of Transport
1. Ex Works (EXW)
The seller makes goods available at its own premises. The buyer arranges and pays for everything else, including loading and export clearance. It puts the least obligation on the seller and is awkward for exports from India, because the buyer often cannot handle Indian export formalities.
Read more: Transportation in business.
2. Free Carrier (FCA)
The seller hands the goods, cleared for export, to the buyer’s nominated carrier at an agreed place. Risk passes at that point. The ICC recommends FCA over FOB for container shipments.
3. Carriage Paid To (CPT)
The seller pays freight to the named destination, but risk passes to the buyer once goods are handed to the first carrier.
4. Carriage and Insurance Paid To (CIP)
Like CPT, plus the seller buys insurance. Under Incoterms 2020, CIP requires all-risk cover (Institute Cargo Clauses A).
5. Delivered at Place (DAP)
The seller delivers to a named place in the buyer’s country, ready for unloading. The buyer handles import clearance and duties.
6. Delivered at Place Unloaded (DPU)
The seller delivers and unloads at the named place. DPU replaced DAT in 2020 and is the only term where the seller must unload.
7. Delivered Duty Paid (DDP)
The seller bears all costs and risks to the buyer’s door, including import duty and taxes. It puts the most obligation on the seller.
Terms for Sea and Inland Waterway Only
8. Free Alongside Ship (FAS)
The seller places the goods next to the vessel at the named port of shipment. Common for bulk cargo such as grain or timber.
9. Free on Board (FOB)
The seller loads the goods on board the vessel. Risk passes once the goods are on board. The buyer pays ocean freight and insurance. Indian exporters often quote FOB.
10. Cost and Freight (CFR)
The seller pays freight to the destination port, but risk passes when goods are loaded at the origin port. Older books call it C&F.
11. Cost, Insurance and Freight (CIF)
Like CFR, plus the seller buys insurance. CIF only requires minimum cover (Institute Cargo Clauses C), so buyers often ask for more. India values imports for customs duty on a CIF basis.
Who Pays What: Quick Comparison
| Term | Export clearance | Main freight | Insurance | Import duty | Risk passes |
|---|---|---|---|---|---|
| EXW | Buyer | Buyer | Buyer | Buyer | Seller’s premises |
| FCA | Seller | Buyer | Buyer | Buyer | Handover to carrier |
| FOB | Seller | Buyer | Buyer | Buyer | On board at origin port |
| CFR | Seller | Seller | Buyer | Buyer | On board at origin port |
| CIF | Seller | Seller | Seller (min. cover) | Buyer | On board at origin port |
| CPT | Seller | Seller | Buyer | Buyer | Handover to first carrier |
| CIP | Seller | Seller | Seller (all-risk) | Buyer | Handover to first carrier |
| DAP | Seller | Seller | Seller’s choice | Buyer | At destination |
| DPU | Seller | Seller | Seller’s choice | Buyer | At destination, unloaded |
| DDP | Seller | Seller | Seller’s choice | Seller | At buyer’s door |
Which Term Should an Exporter Quote?
For containers, FCA or CIP gives cleaner risk transfer than FOB or CIF, because the container leaves your hands at the depot, not when it is loaded on the ship. For new buyers who want a landed price, DAP is common. Avoid DDP unless you know the import country’s tax rules well; you become liable for its duties. Always write the version, for example “FCA Nhava Sheva ICD, Incoterms 2020”. For export paperwork, see our guide to documents used in dispatching goods.
