The Incoterms terms of delivery (International Commercial Terms) are a globally recognised set of trade rules created by the International Chamber of Commerce (ICC). They define the responsibilities, risks, and costs between the seller and the buyer in both international and domestic trade.

The first version of Incoterms was published in 1936, and new versions are issued approximately every ten years to reflect changes in global trade practices.
The latest update, Incoterms 2020, was introduced in September 2019 and came into force on 1 January 2020.

What Are Incoterms Terms of Delivery?

The Incoterms 2020 framework consists of 11 trade terms, each represented by a three-letter abbreviation such as EXW, CPT, or DAP.

Each rule clearly defines who is responsible for:

  • arranging transportation or insurance,
  • covering shipping and loading costs,
  • handling customs clearance,
  • and when the risk transfers from seller to buyer.

In short, the Incoterms terms of delivery make international trade more transparent and predictable by assigning clear obligations to both parties.

What Incoterms Are Not

Although they play a vital role in global trade, Incoterms do not replace a sales contract. They do not regulate:

  • transfer of ownership of goods,
  • payment methods or currency,
  • quality specifications,
  • export/import restrictions or taxes.

The Incoterms terms of delivery were designed to be universal — applicable to any type of goods, transport, or industry — but they do not define the commercial or legal details of a sale.

How to Use Incoterms Terms of Delivery Correctly

To apply an Incoterms rule properly, it should appear directly in the sales contract or commercial invoice in the following format:

[Chosen Incoterms rule] [Named place, port, or point] Incoterms® 2020

Example:

EXW Minsk Incoterms 2020

Always include both the place and the year, since Incoterms rules are periodically updated.

  • In rules starting with E, F, and D, the named place defines where risk transfers from the seller to the buyer.
  • In D terms, it also represents the place of delivery and destination, and the seller must organise transport to that location.
  • In C terms, the seller pays for transport to the named destination, but risk transfers earlier, typically at shipment.

List of Incoterms 2020 – Terms of Delivery

The Incoterms terms of delivery are divided into two main categories:

1. Rules for Any Mode of Transport (7 terms)

  • EXW (Ex Works) – at the seller’s premises (minimal seller responsibility)
  • FCA (Free Carrier) – delivered to the carrier
  • CPT (Carriage Paid To) – transport paid to destination
  • CIP (Carriage and Insurance Paid To) – transport and insurance paid to destination
  • DAP (Delivered At Place) – delivered to the agreed place
  • DPU (Delivered at Place Unloaded) – delivered and unloaded at destination (replaced DAT)
  • DDP (Delivered Duty Paid) – delivered with all duties paid (maximum seller responsibility)

2. Rules for Sea and Inland Waterway Transport (4 terms)

  • FAS (Free Alongside Ship) – alongside the ship at the port of loading
  • FOB (Free On Board) – on board the ship at the port of loading
  • CFR (Cost and Freight) – cost and freight to destination port
  • CIF (Cost, Insurance and Freight) – cost, insurance, and freight to destination port

EXW vs DDP – Two Opposite Ends of Incoterms Terms of Delivery

Among all Incoterms, EXW and DDP represent two extremes:

  • Under EXW, the seller’s responsibility is minimal, and the buyer arranges almost everything.
  • Under DDP, the seller bears maximum responsibility, including shipping, customs clearance, and payment of import duties.

In practice, both extremes can cause customs and VAT issues in the UK if not applied correctly — especially when the seller is not established in the country of import.

💡 Practical Tip from Simple Duty

When using Incoterms terms of delivery in your trade documents, always make sure the selected rule reflects your real transport and customs setup.

For example, choosing DDP (Delivered Duty Paid) while the seller is located outside the UK can lead to unexpected import VAT liabilities or delays at customs.

Our advice: select the rule that matches your logistics reality — and if in doubt, ask a customs expert before shipping.

👉 Need Help Applying Incoterms or Preparing UK Customs Documents?

At Simple Duty LTD, we support importers and exporters in all UK customs procedures — from EXW to DDP and beyond.
We help ensure your documentation, Incoterms usage, and customs declarations are fully compliant.

📧 Contact us: simpleduty@simpleduty.co.uk
🌐 https://simpleduty.co.uk/