Key production numbers
Current editionIncoterms 2020 contains 11 official trade terms.
What they allocateDelivery obligations, transfer of risk and defined costs between seller and buyer.
What they do not replaceProduct specification, payment, ownership, remedies, law or customs advice.
Contract formatWrite the chosen rule, named place or port and “Incoterms 2020.”
What Incoterms actually do
The International Chamber of Commerce defines 11 Incoterms 2020 rules. They allocate delivery tasks, risk transfer and specified costs between buyer and seller. They help both sides understand who arranges carriage, insurance or clearance and where delivery occurs.
They do not by themselves determine product quality, payment timing, title transfer, breach remedies or governing law. Those points belong in the quotation, purchase order and sales contract.
EXW and FCA
EXW places limited transport obligations on the seller, with the buyer taking responsibility from the named seller location. In cross-border practice, export formalities and loading can make EXW awkward for a foreign buyer.
FCA can be clearer when the seller hands goods to the buyer’s nominated carrier at a named place and handles export clearance within the rule. The exact named place matters because risk transfer and loading responsibility change with location.
FOB and CIF
FOB and CIF are rules intended for sea and inland waterway transport. They are often used in apparel conversations, but containerized door-to-door movements may be better described with a multimodal rule after professional review.
Under CIF, the seller contracts carriage and minimum insurance within the rule, while the risk-transfer point is not simply the final destination. Never assume “seller pays freight” means the seller carries every risk until arrival.
DAP and DDP
DAP has the seller arrange delivery to the named destination while the buyer handles import clearance and duties. DDP adds substantial seller responsibility for import clearance and applicable duties under the agreed scope.
DDP should only be used when the seller can lawfully and practically meet destination import obligations. Taxes, importer arrangements, remote delivery and exceptional charges still need written clarification.
How to write the term
ICC recommends making the chosen term and location explicit, such as “FCA [named place] Incoterms 2020.” A city name alone may be too broad; use a port, terminal, warehouse or address appropriate to the rule.
Then list inclusions and exclusions: pickup, export documents, origin handling, main freight, insurance, destination handling, customs brokerage, duty, tax, appointment delivery and storage.
Match the term to business capability
A new brand without a broker may prefer a managed landed-delivery option, while an experienced importer may want control through its freight contracts and registrations. The right rule follows compliance capability, route, cash flow and risk—not habit.
Use the official ICC materials and licensed logistics, customs or tax professionals for a binding decision. A factory guide can help prepare questions but is not legal advice.
Common apparel trade-term direction
| Term | Mode direction | Practical import note |
|---|---|---|
| EXW | Any mode | Buyer manages most transport tasks from seller location |
| FCA | Any mode | Useful handover to buyer-nominated carrier |
| FOB | Sea/inland waterway | Named port and on-board delivery matter |
| CIF | Sea/inland waterway | Seller contracts freight and specified insurance |
| DAP | Any mode | Buyer normally handles import clearance and duty |
| DDP | Any mode | Seller takes extensive import responsibility |
Frequently asked questions
Is DDU an Incoterms 2020 rule?
No. DDU was removed; DAP is often the closer current rule, but contracts should use exact responsibilities.
Does FOB include delivery to my warehouse?
No. FOB is a sea rule centered on the named port; inland delivery requires separate scope.
Does DDP include sales tax or VAT?
Do not assume it does. Clarify tax, importer and destination requirements in writing.
Which rule is best for small apparel brands?
It depends on import capability, route and commercial needs; compare managed delivery with buyer-controlled clearance.
Do Incoterms control payment?
No. Deposit, balance and payment milestones need separate contract terms.
Should the year be stated?
Yes. Write Incoterms 2020 so the referenced edition is clear.
Sources and verification
Official and industry-primary references used to verify standards, regulations and definitions in this guide.
ICC Incoterms 2020 official overview ↗ICC Incoterms questions and answers ↗U.S. Customs textile import guidance ↗