Incoterms 2020 explained

The buyer bears all costs and risks involved in taking the goods from the seller’s premises to the desired destination. The seller’s obligation is to make the goods available at their premises (works, factory, warehouse). This term represents the minimum obligation for the seller.

In practice: cheapest on paper, most work for you, and you carry the risk from the moment it is packed.

The seller hands over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point. If no precise point is indicated, the seller may choose within the place or range stipulated where the carrier takes the goods into their charge. When the seller’s help is required in making the contract with the carrier, the seller may act at the buyer’s risk and expense.

In practice: the right term for containerised cargo that would otherwise be sold FOB.

The seller must place the goods alongside the ship at the named port and clear the goods for export. Suitable only for maritime transport, not for multimodal sea transport in containers. Typically used for heavy-lift or bulk cargo.

The seller loads the goods on board the vessel nominated by the buyer. Cost and risk divide when the goods are actually on board. The seller clears the goods for export. The buyer must tell the seller the vessel and port of loading. Applicable to maritime and inland waterway transport only, not to multimodal transport in containers, where FCA should be used.

In practice: the most common term on import quotes and usually the easiest for you to control, because you choose the forwarder and the freight rate.

The seller pays the costs and freight to bring the goods to the named port of destination. Risk of loss or damage passes to the buyer when the goods are on board the vessel at the port of shipment. The seller clears the goods for export. Use only for sea or inland waterway transport.

The seller has the same obligations as under CFR but must also provide insurance against the buyer’s risk of loss or damage during transit, at minimum Institute Cargo Clause (C) cover. The seller clears the goods for export. Use only for sea or inland waterway transport.

In practice: convenient, but you pay the supplier’s margin on freight, cannot shop the rate, and the minimum cover may not make you whole.

The seller pays the freight for carriage of the goods to the named destination. Risk of loss or damage passes from seller to buyer once the goods are delivered to the carrier. The seller clears the goods for export.

The seller has the same obligations as under CPT and must also obtain insurance against the buyer’s risk of loss or damage during carriage. Under Incoterms 2020 that cover must be at least Institute Cargo Clause (A), all risks. The seller clears the goods for export.

The seller delivers when the goods are placed at the buyer’s disposal on the arriving means of transport, ready for unloading at the named place of destination. Specify the point within the place as clearly as possible, because risk transfers there. If the seller is to clear the goods and pay duties, consider DDP.

• Seller bears the responsibility and risk to deliver the goods to the named place
• Seller should obtain contracts of carriage that match the contract of sale
• Seller clears the goods for export
• Unless agreed, the seller cannot recover unloading costs incurred at destination
• Importer handles customs clearance and pays customs duties

Introduced in Incoterms 2020 to replace DAT (Delivered At Terminal). The seller delivers once the goods are unloaded and placed at the buyer’s disposal at the named place, which can be a terminal, quay, warehouse or any other place. The seller bears the risk and cost of bringing the goods there and unloading them.

• Seller is responsible for costs and risks to the point specified in the contract, including unloading
• Seller’s forwarding contract should mirror the contract of sale
• Seller handles export clearance
• Importer clears the goods for import, arranges import formalities and pays import duty

DAT (Incoterms 2010): the seller delivered once the goods, unloaded from the arriving transport, were placed at the buyer’s disposal at a named terminal such as a quay, warehouse, container yard or road, rail or air terminal. If the seller was to carry the goods beyond the terminal, DAP or DDP applied.

The seller delivers the goods to the named place in the country of importation and carries all costs and risks of bringing them there, including duties, taxes and customs formalities.

In practice: simplest for you and usually the most expensive, because someone else prices your risk. The seller also needs a way to act as importer in South Africa.