Incoterms 2020: who pays and where the risk passes
Pick the delivery rule for your contract and see who pays for each stage — carriage, insurance, export and import customs — and at which point the risk for the goods passes from you, the seller, to your Russian buyer.
What Incoterms decide
Incoterms are the three-letter codes in a sales contract that answer two questions: who pays for each stage of delivery, and at what moment the risk of loss or damage passes from the seller to the buyer. The current edition is Incoterms 2020, with 11 rules.
We split a shipment into seven stages: packing and loading, delivery to the port or carrier, export customs, main carriage, cargo insurance, import customs (duties and VAT) and delivery to the door. For every rule below you can see which of these stages are yours as the supplier and which your Russian customer takes on.
All 11 Incoterms 2020 rules compared
| Rule | Transport | Export clearance | Main carriage | Insurance | Import clearance | Delivery to door | Risk passes to buyer |
|---|---|---|---|---|---|---|---|
| EXW — Ex Works | Any | Buyer | Buyer | Buyer | Buyer | Buyer | After packing and loading at your premises |
| FCA — Free Carrier | Any | Seller | Buyer | Buyer | Buyer | Buyer | After export clearance, on handover to the carrier |
| FAS — Free Alongside Ship | Sea / inland waterway | Seller | Buyer | Buyer | Buyer | Buyer | Alongside the ship at the port of shipment |
| FOB — Free On Board | Sea | Seller | Buyer | Buyer | Buyer | Buyer | On board the ship at the port of shipment |
| CFR — Cost and Freight | Sea | Seller | Seller | Buyer | Buyer | Buyer | On board the ship at the port of shipment |
| CIF — Cost, Insurance and Freight | Sea | Seller | Seller | Seller | Buyer | Buyer | On board the ship at the port of shipment |
| CPT — Carriage Paid To | Any | Seller | Seller | Buyer | Buyer | Buyer | On handover to the first carrier |
| CIP — Carriage and Insurance Paid To | Any | Seller | Seller | Seller | Buyer | Buyer | On handover to the first carrier |
| DAP — Delivered At Place | Any | Seller | Seller | Seller | Buyer | Seller | At the agreed place of destination |
| DPU — Delivered at Place Unloaded | Any | Seller | Seller | Seller | Buyer | Seller | At destination, after unloading |
| DDP — Delivered Duty Paid | Any | Seller | Seller | Seller | Seller | Seller | At the agreed place of destination |
Packing and loading at your premises are always the seller’s cost. Under EXW the buyer also pays for pre-carriage to the port or carrier; under every other rule the seller does.
Each rule from the seller’s side
EXW — Ex Works
The minimum of seller obligations. The buyer arranges everything: collection, export, carriage and import. Maximum control and work for the buyer. For an EU supplier, check how you will obtain proof of export for VAT zero-rating when the buyer handles export.
FCA — Free Carrier
You load the goods, clear export and hand them to the buyer’s carrier. A flexible rule for any transport and for containers — often recommended instead of FOB. We can collect from your premises and lodge the export declaration on your behalf.
FAS — Free Alongside Ship
Sea and inland waterway only. You deliver the goods alongside the vessel at the port of shipment.
FOB — Free On Board
Sea only. You load the goods on board the vessel; freight and risk from then on are the buyer’s. One of the most common rules in trade with Russia.
CFR — Cost and Freight
Costs and risk part ways: you pay freight to the port of destination, but the risk passes to the buyer as soon as the goods are on board at the port of shipment. Your buyer should insure the cargo.
CIF — Cost, Insurance and Freight
Like CFR, but you also insure the cargo (minimum cover). The risk still passes to the buyer on board — a common trap for buyers who assume the seller is responsible until arrival.
CPT — Carriage Paid To
Any transport. You pay carriage to the agreed place, but the risk passes to the buyer when the goods are handed to the first carrier.
CIP — Carriage and Insurance Paid To
Like CPT, but you insure the cargo — under Incoterms 2020 with extended cover. The risk passes to the buyer at the first carrier.
DAP — Delivered At Place
You carry the goods to the agreed place in Russia and bear the risk until they are ready for unloading. Import customs (duties and VAT) are the buyer’s.
DPU — Delivered at Place Unloaded
Like DAP, but you also unload the goods at the destination. The buyer handles import customs.
DDP — Delivered Duty Paid
Maximum convenience for the buyer: you are responsible for everything, including import customs clearance in Russia and delivery to the door. The buyer simply receives the goods.
Which rule suits a sale to Russia
Buyers who want to control their logistics and costs usually ask for FCA or FOB: you hand the goods over cleared for export, and the buyer’s forwarder takes it from there. Buyers who want “delivered and done” ask for DAP or DDP, which puts carriage — and under DDP, Russian import clearance — on your side.
Russian importers placing a first order often prefer EXW or FOB, because they can see the real price of the goods and of the logistics separately. A price with freight “built in”, as under CIF, is usually marked up. For you, FCA is often the cleaner option than EXW: you keep control of the export declaration and the evidence of export that your VAT return depends on.
Tranzit3 organises carriage and import customs clearance door to door under any Incoterms rule, so the choice can follow the commercial logic of the deal rather than what either party can arrange on their own.
Not sure which rule to put in the contract?
We will suggest the best delivery terms for your goods, route and buyer, and organise transport and customs clearance door to door under any Incoterms rule. Reply within 2 business hours. B2B only: shipments from 50 kg (air: no weight limit), minimum service fee €200; goods not subject to EU/UK/Swiss/US sanctions.
Frequently asked questions about Incoterms
What is Incoterms 2020?
The international rules for interpreting trade terms. They define which party — seller or buyer — pays for carriage, insurance and customs, and at what moment the risk of loss or damage to the goods passes. The 2020 edition is in force, with 11 rules.
How do the E, F, C and D groups differ?
E (EXW) — the minimum of seller obligations. F (FCA, FAS, FOB) — the seller hands the goods to the carrier and the buyer pays the main carriage. C (CFR, CIF, CPT, CIP) — the seller pays the main carriage, but the risk passes earlier. D (DAP, DPU, DDP) — the seller delivers the goods to the country of destination.
Which Incoterms rule should I agree with a Russian buyer?
If the buyer wants to control logistics and save money — FCA or FOB, with us organising carriage and customs. If the buyer wants the goods simply delivered — DAP or DDP. We give specific advice for your goods, route and buyer.
What is the trap in CFR and CIF?
The seller pays freight to the port of destination, but the risk of loss passes to the buyer already at the port of shipment, on board the vessel. So if something happens to the goods in transit, the buyer bears the loss even though the seller paid for the carriage. That is why under CFR the buyer must insure the cargo.
Who handles customs under the different rules?
Export customs are almost always cleared by the seller (except under EXW). Import customs in Russia are cleared by the buyer — except under DDP, where the seller takes them on. Tranzit3 handles Russian import clearance door to door under any rule.
Related terms and guides
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