Classification of the Incoterms 2020

The Incoterms can be classified according to three criteria that have to do all of them with transportation: the type of transport, payment of the principal transport and transfer of risk in transport. In the classification of Incoterms 2020, the prevailing criterion is the type of transport used.

Mode of transport used: the first criterion is the mode of transport used. In the version of Incoterms 2010, there are seven Incoterms that can be used with any mode of transport (surface, air or sea) or multiple modes (multimodal). On the contrary, there are four Incoterms that can only be used with sea transport and inland waterways (canals, rivers, lakes).

Payment for the main transport: the second criterion of classification is the payment of main transport which is the international transport between the country of origin and the country of destination. The Incoterms distinguish between those terms in which the main transport payment is made by the buyer (importer) and those where it is made by the seller (exporter).

Transfer of risks in transporting the goods: finally, we should distinguish between those Incoterms in which the obligation to deliver the goods by the seller and, therefore, the transfer of risks in transport occurs in the country of origin, while in others Incoterms the obligation of delivery occurs in the country of destination.

AcronymsIncotermMode of transportPayment of main transportTransfer of risks in transport
EXW Ex Works Any mode Buyer Origin
FCA Free Carrier Any mode Buyer Origin
CPT Carriage Paid To Any mode Seller Origin
CIP Carriage and Insurance Paid To Any mode Seller Origin
DAP Delivered At Place Any mode Seller Destination
DPU Delivered At Place Unloaded Any mode Seller Destination
DDP Delivered Duty Paid Any mode Seller Destination
FAS Free Alongside Ship Sea Buyer Origin
FOB Free On Board Sea Buyer Origin
CFR Cost and Freight Sea Seller Origin
CIF Cost, Insurance and Freight Sea Seller Origin

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