When a part travels from one country to another, you need to know who pays for transport, who deals with customs and when the goods become the buyer's responsibility. The Incoterms® 2020 rules of the International Chamber of Commerce (ICC) answer these questions in three letters.
On HOTIPARTS, the supplier can state a rule in their answer. It is a proposal: you confirm it together when you deal directly with each other.
Who pays for what? The 11 rules at a glance
| Rule | Main carriage | Insurance | Export clearance | Import duties and VAT | Risk passes to the buyer |
|---|---|---|---|---|---|
| Any mode of transport (road, rail, air, parcel) | |||||
| EXW ex works |
Buyer | Not required | Buyer | Buyer | at the supplier's premises, once the part is made available |
| FCA free carrier |
Buyer | Not required | Supplier | Buyer | on handover to the buyer's carrier |
| CPT carriage paid to |
Supplier | Not required | Supplier | Buyer | on handover to the first carrier |
| CIP carriage and insurance paid to |
Supplier | Supplier | Supplier | Buyer | on handover to the first carrier |
| DAP delivered at place |
Supplier | Not required | Supplier | Buyer | at destination, before unloading |
| DPU delivered at place unloaded |
Supplier | Not required | Supplier | Buyer | at destination, after unloading |
| DDP delivered duty paid |
Supplier | Not required | Supplier | Supplier | at destination, cleared for import, before unloading |
| Sea and inland waterway only (port to port) | |||||
| FAS free alongside ship |
Buyer | Not required | Supplier | Buyer | alongside the ship at the port of shipment |
| FOB free on board |
Buyer | Not required | Supplier | Buyer | on board the ship at the port of shipment |
| CFR cost and freight |
Supplier | Not required | Supplier | Buyer | on board the ship at the port of shipment |
| CIF cost, insurance and freight |
Supplier | Supplier | Supplier | Buyer | on board the ship at the port of shipment |
In every case, the buyer and supplier state the rule followed by the agreed place, for example “DAP Lausanne, Incoterms® 2020”.
Which rule should you choose?
Answer a few questions and we will suggest the matching rule.
Estimate import costs
An estimate to know roughly what the part will cost once it has arrived.
Incoterms® is a registered trademark of the International Chamber of Commerce (ICC).
Rules for any mode of transport
EXW – Ex Works
The supplier makes the part available at their premises. The buyer arranges and pays for everything else: loading, transport, export and import clearance. Risk passes to the buyer as soon as the part is made available.
FCA – Free Carrier
The supplier hands the part, cleared for export, to the carrier chosen by the buyer, at their premises or another agreed place. If handover takes place at the supplier's premises, the supplier loads. The buyer pays for the main carriage and the import. Risk passes on handover to the carrier.
CPT – Carriage Paid To
The supplier chooses and pays for transport to the agreed destination. Note: risk passes to the buyer on handover to the first carrier, not on arrival. The buyer pays for the import.
CIP – Carriage and Insurance Paid To
Like CPT, but the supplier must also insure the goods during transport, with broad cover, for at least 110% of their value.
DAP – Delivered at Place
The supplier arranges and pays for transport to the agreed place, usually the buyer's address. Risk passes on arrival, with the goods ready for unloading. The buyer unloads and pays import duties and VAT.
DPU – Delivered at Place Unloaded
Like DAP, but the supplier also unloads the goods at the agreed place. It is the only rule in which the supplier unloads. Risk passes after unloading.
DDP – Delivered Duty Paid
The supplier delivers to the agreed place and also handles the import: they pay customs duties and import VAT. It is the most complete rule for the supplier. The buyer unloads.
Rules for sea transport
These four rules are meant for sea and inland waterway transport, when the goods are handed over directly at the port. For a container or a parcel, FCA, CPT or CIP fit better.
FAS – Free Alongside Ship
The supplier places the goods, cleared for export, alongside the ship at the port of shipment. The buyer pays sea freight and the import. Risk passes alongside the ship.
FOB – Free On Board
The supplier loads the goods, cleared for export, on board the ship chosen by the buyer at the port of shipment. Risk passes once the goods are on board. The buyer pays sea freight and the import.
CFR – Cost and Freight
The supplier pays freight to the port of destination. Risk nevertheless passes once the goods are loaded on board at the port of shipment. The buyer pays for the import.
CIF – Cost, Insurance and Freight
Like CFR, but the supplier also insures the goods during transport, with minimum cover, for at least 110% of their value. The buyer can ask for broader cover.
Our tips for spare parts
- For a parcel sent abroad, DAP (the supplier ships to you, you pay customs) and FCA (your carrier collects the part) are the simplest.
- Avoid EXW for shipments abroad: the buyer would then have to handle export clearance in the supplier's country.
- Choose DDP only if the supplier can clear customs in your country.
- Always state the place, for example “DAP Lausanne, Incoterms® 2020”.
- An Incoterms® rule does not say when to pay or when you become the owner: agree on this together.
Incoterms® is a registered trademark of the International Chamber of Commerce (ICC). This page summarises the Incoterms® 2020 rules in our own words; it does not replace the official text, available from the ICC.