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Incoterms 2020 governs exactly where cost and risk transfer between buyer and seller. Choosing the right term is about matching your logistics capability, not copying what a supplier proposes.
The four terms importers meet most
- EXW: the seller makes goods available at their premises; you take on everything. Highest control, highest workload.
- FCA: the seller hands over to your carrier at a named place; a cleaner, more modern alternative to FOB for containers.
- CFR: the seller pays freight to the destination port, but risk passes at loading. Easy, but you may inherit a weak insurance position.
- CIP: the seller insures to the destination under broader cover than the old CIF minimum.
Watch the insurance clause
The difference between minimum cover and all-risk cover sits inside the term. For temperature-sensitive or high-value food, confirm the cover level in writing, because a claim denied at the port is expensive.
Buyer tip: state the Incoterm, the named place and the edition (2020) on the quotation and the purchase order.
Matching term to capability
New importers often start with CFR or DDP for simplicity. As volume grows and a forwarder is proven, terms such as FCA or EXW give better cost visibility and control.
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