Incoterms 2020 in plain words: who is responsible for what

4 March 2026

What Incoterms are, why they are needed and how the key terms from EXW to DDP differ — in plain language, with a view from the exporter’s side.

Why Incoterms are needed

Incoterms are a set of standard international terms that define the moment when responsibility and costs for the goods pass from seller to buyer. They prevent disputes: once the term is stated in the contract, both parties know who pays for transport, insurance and customs.

Incoterms 2020 contains 11 terms, grouped by mode of transport and by how obligations are divided.

Key terms

Term	What it means
EXW (Ex Works)	Minimum obligations for the seller: the buyer collects the goods from the warehouse and bears all further costs.
FCA (Free Carrier)	The seller hands the goods over to the carrier.
FOB	Used for sea freight; the goods are loaded on board the vessel.
CIF	Sea freight; the seller pays freight and insurance to the port of destination.
DAP	Delivery to the agreed place, without unloading and without import clearance.
DDP (Delivered Duty Paid)	Maximum obligations for the seller: the goods are delivered to the recipient cleared through customs.

What this means for an exporter to Russia

For the importer, DDP is the most convenient term but also the most expensive. For you as the seller, DDP to Russia means taking on import clearance in a country where you have no presence — in practice this is rarely workable. At the other end, EXW puts export clearance on a buyer who cannot act as declarant in your country, which is why many deals stall on the EX1.

FCA sits in between: you hand the goods to the buyer’s carrier with export clearance done. If you do not want to deal with the export declaration yourself, we can lodge the EX1 for you remotely or at our Rotterdam warehouse, so the term works in practice.

How to choose the term

The choice depends on the parties’ experience and on how much control they want over the process. Beginner importers are more comfortable with DAP or DDP, leaving logistics to the supplier or forwarder. Experienced companies choose EXW or FCA to manage costs themselves.

We work on any Incoterms and will suggest the best option for your deal.

Questions and answers

How many terms are in Incoterms 2020?

Eleven, grouped by mode of transport and by the division of obligations between seller and buyer.

Which terms are for sea freight only?

FOB and CIF are used for sea freight; under CIF the seller pays freight and insurance to the port of destination.

Who handles export clearance under EXW?

Formally the buyer — but a buyer outside the EU cannot act as declarant there, so a local customs agent is needed. We lodge the EX1 remotely in such cases.

Incoterms 2020: which term suits an import to Russia →Your supplier cannot lodge the EX1? →EX1 export declaration →

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