Tools
Incoterms Selector. Which Incoterm, and should you ship DDP?
Incoterms set who pays for each leg of a shipment, who clears customs, and where the risk passes from seller to buyer. Pick the wrong one and a supplier's cheap quote comes with hidden destination charges, or your customer gets a duty bill at the door. Tell us which side of the deal you're on and we'll recommend the right Incoterms® 2020 rule.
Incoterm Finder
What an Incoterm decides
Who pays for each leg, who clears customs, and where the risk passes. Get it wrong and someone pays twice, or nobody's insurance covers the goods.
- Rules in Incoterms® 2020
- 11
- For any mode of transport
- 7
- Sea and inland waterway only
- 4
Answer the questions on the left and press Recommend. You'll get the rule to use, who does what under it, and the alternatives worth knowing about.
Recommended Incoterms® 2020 rule
Who does what
- Export clearance
- Main freight
- Import clearance
- Import duty and VAT
- Insurance
- Risk passes
In your contract, name the rule, the place and the edition: . The named place here is .
Watch out for
Also consider
Shipping DDP? You need a customs-capable partner.
Under DDP someone has to act as importer, clear customs and pay the duty and VAT in the destination. A 3PL partner that handles this for you makes DDP routine. Tell us where you ship and we'll match you with up to three vetted UK 3PL partners, 0% commission to brands.
Pricing this shipment?
Your Incoterm decides who pays the freight, the duty and the import VAT. Work out the full landed cost per unit, or talk to us about the fulfilment setup behind it.
Small print. These figures are estimates to help you plan, worked out from what you enter and from published rates and rules that can change without notice. They aren't quotes, guarantees or professional advice. Incoterms® is a trademark of the International Chamber of Commerce. Name the rule, the exact place and the edition in your contract, e.g. "FCA Yantian container terminal, Shenzhen, Incoterms® 2020", and confirm the choice with your freight forwarder or customs broker before you sign. SHIPMAX accepts no liability for decisions made on the strength of these figures.
The working out
DAP vs DDP: the choice that matters most for D2C
Under DAP (Delivered at Place) you pay to get the parcel to your customer, but they clear import and pay import VAT, any duty and the carrier's handling fee before the parcel is released. To a consumer, that looks like a surprise bill. Many refuse to pay it, and you pay for the return and lose the sale.
Under DDP (Delivered Duty Paid) you handle import too, so the customer pays exactly what they saw at checkout. You need to price duty and VAT into the sale and be able to act as importer, which usually means a VAT registration and EORI in the destination, or a carrier or 3PL that runs DDP for you.
For cross-border D2C, DDP is almost always the right answer once you're shipping regularly. DAP suits B2B, where the buyer wants to import in their own name and reclaim the import VAT.
Buying from a supplier: EXW, FOB or FCA?
EXW looks cheapest, but you become responsible for export clearance in the supplier's country, which most overseas buyers can't legally do. FOB is the long-standing default for sea freight: the supplier gets goods loaded at their port and your forwarder takes it from there. It suits bulk cargo well. For containers, FCA is the better fit, because risk passes when the container is handed over at the terminal, not days later once it's on board. That's the ICC's own guidance, and it's what the selector above recommends.
Be careful with CIF and CFR. The supplier pays the freight, but the risk passes to you at the port of loading, and supplier-booked freight often comes with marked-up destination charges. For containers, their equivalents are CPT and CIP, and CIP requires all-risks insurance where CIF only requires minimum cover.
All 11 Incoterms® 2020 rules
| Rule | Mode | Main freight | Import clearance and duty | Risk passes |
|---|---|---|---|---|
| EXW Ex Works | Any mode | Buyer | Buyer | When goods are made available at the seller's premises, not loaded. The buyer does almost everything, including loading and export clearance in the seller's country. |
| FCA Free Carrier | Any mode | Buyer | Buyer | When goods are handed to the buyer's carrier at the named place. The seller clears export and hands over to the buyer's carrier. This is the modern choice for container freight. |
| CPT Carriage Paid To | Any mode | Seller | Buyer | When goods are handed to the first carrier, even though the seller pays freight to destination. The seller pays the freight, but risk passes to the buyer early, at origin. The container equivalent of CFR. |
| CIP Carriage and Insurance Paid To | Any mode | Seller | Buyer | When goods are handed to the first carrier. Like CPT, but the seller must also buy all-risks insurance for the buyer. The container equivalent of CIF. |
| DAP Delivered at Place | Any mode | Seller | Buyer | At the named destination, ready for unloading. The seller delivers to the door. The buyer clears import and pays duty and import VAT. |
| DPU Delivered at Place Unloaded | Any mode | Seller | Buyer | At the named destination, once unloaded. Like DAP, but the seller also unloads. It's the only rule where the seller unloads at destination. |
| DDP Delivered Duty Paid | Any mode | Seller | Seller | At the named destination, ready for unloading. The seller does everything, including import clearance, duty and import VAT. The buyer pays nothing more. |
| FAS Free Alongside Ship | Sea and inland waterway | Buyer | Buyer | When goods are placed alongside the vessel at the port of shipment. Used for bulk and breakbulk cargo, and rarely for D2C goods. |
| FOB Free On Board | Sea and inland waterway | Buyer | Buyer | When goods are on board the vessel at the port of shipment. The seller gets the goods to port and on board, and the buyer books and pays the ocean freight. Best suited to bulk; for containers, FCA fits better. |
| CFR Cost and Freight | Sea and inland waterway | Seller | Buyer | When goods are on board at the port of shipment, even though the seller pays freight. The seller pays the ocean freight, but risk passes to the buyer once the goods are loaded. For containers, CPT fits better. |
| CIF Cost, Insurance and Freight | Sea and inland waterway | Seller | Buyer | When goods are on board at the port of shipment. Like CFR, plus minimum insurance. Customs often value imports on a CIF basis. For containers, CIP fits better. |
Incoterms, explained
The questions behind the rule.
Shipping across borders?
We match consumer brands with vetted UK 3PL partners, and we look at how you ship cross-border as part of it. Up to three matches, 0% commission to brands.