Glossary / Incoterms
Incoterms — explained
Incoterms are eleven international delivery-term rules published by the International Chamber of Commerce (ICC) that define the place of delivery of the goods, carriage/insurance responsibility and the point at which risk passes between buyer and seller; the version currently in force is Incoterms 2020.
The ICC updates the rules roughly once a decade (2000, 2010, 2020); as of 2026 the version in force is still Incoterms 2020, and no new edition has been published. Incoterms is not a method of payment — it does not determine how payment is to be made, but rather at what point the goods are delivered, who bears the carriage/insurance cost, and who is responsible for customs clearance.
The 11 rules are divided into four letter groups. In Group E (EXW) the seller's obligation is lowest — the goods are delivered at the seller's own premises, and everything else, including carriage and export customs clearance, technically falls to the buyer. In Group F (FCA, FAS, FOB) the seller handles export customs clearance while the buyer arranges main carriage. In Group C (CFR, CIF, CPT, CIP) the seller pays the carriage cost (and insurance too, under CIF/CIP), but risk passes to the buyer the moment the goods are loaded — the fact that cost and risk do NOT pass at the same point is the aspect most often confused in this group. In Group D (DAP, DPU, DDP) the seller carries the goods all the way to the point of destination; only under DDP are import duties also for the seller's account.
The delivery term also affects how customs value is determined: under a CIF-based delivery, freight and insurance cost are already included in the invoice value; under an FOB-based delivery, these items are added separately in the declaration. Which items are included in the value depends on the delivery term used.
When You Encounter It
The delivery term is agreed when the contract or proforma invoice is being prepared — changing it once shipment has begun requires recalculation on both the freight and the customs side. Two points are the most common source of confusion ACR sees. (1) Under EXW it is assumed that "the seller is already doing everything", when in fact the buyer is the technical obligor for the export customs declaration, and the buyer often has no representative able to file a declaration in the seller's country; for this reason, parties under EXW make a separate arrangement that effectively leaves export customs clearance to the seller. (2) Under DDP the importer expects "I won't have to deal with customs at all", when in fact in Türkiye the import declaration generally has to be registered in the name of an obligor established in Türkiye; if the seller does not have this status, the import leg of a DDP shipment may end up being handled through the importer in practice.
When comparing freight quotes, which items (terminal handling, insurance, destination charges) are included in the freight cost depends on the delivery term chosen; how that comparison is made is a separate matter.
What It Doesn't Cover
- Incoterms only govern the allocation of cost and risk and the place of delivery; they do NOT determine when ownership of the goods transfers, when or how payment is to be made, or which law applies — these are separate clauses of the contract.
Often Confused With
| Comparison | Difference |
|---|---|
| Incoterms vs Payment Method (Letter of Credit, Advance Payment, Open Account) | Incoterms determine the place of delivery of the goods and which party bears the carriage/customs costs; they do not determine when or by what method payment is made. In a contract the delivery term may be FOB while the payment method is a letter of credit — the two are independent decisions. |
| Incoterms vs Contract of Carriage (Freight Booking) | Incoterms determine which party between buyer and seller is to ARRANGE carriage; they do not determine the content of the freight contract that party signs with the carrier. That is a separate contract from Incoterms. |
Frequently Asked Questions
What are Incoterms?+
Incoterms are eleven international delivery-term rules published by the International Chamber of Commerce (ICC) that determine the place of delivery of the goods, the carriage/insurance cost and who is responsible for customs clearance between buyer and seller.
Is there a version called "Incoterms 2026"?+
No. As of 2026 the ICC has not published a new edition; the version in force is still Incoterms 2020. The ICC updates its rules roughly once a decade (2000, 2010, 2020); the next revision can be expected around 2030.
How many delivery terms make up Incoterms?+
It consists of eleven rules, divided into four groups: Group E (EXW), Group F (FCA, FAS, FOB), Group C (CFR, CIF, CPT, CIP), Group D (DAP, DPU, DDP).
Under FCA, who is responsible for export customs clearance?+
FCA is part of Group F, where the seller handles export customs clearance. The buyer arranges main carriage — under FCA the seller's obligation ends once the goods are delivered to the carrier at a point specified by the seller.
Under DDP, who handles the import customs clearance?+
Under DDP the seller undertakes to deliver the goods to the point of destination, import duties included. However, in Türkiye the import declaration generally has to be registered in the name of an obligor established in Türkiye; if the seller does not have this status, the import leg may end up being handled through the importer in practice — this is a point that needs to be clarified before the contract is signed when DDP is being considered.
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Related Terms
Where This Term Comes Up in Our Work
Incoterms is one of the documents we track in our logistics and transportation service.
Logistics and TransportationContracted warehouses, container loading, and inland transport organisation.Source
ICC (International Chamber of Commerce) — Incoterms® Rules — Incoterms 2020 is the ICC's official, registered rule set; the 11 delivery terms and their groups are based on this source.
Last updated: August 15, 2026