What Incoterms do, and what they do not
Incoterms are eleven three-letter rules that allocate, between seller and buyer, four things: who delivers where, where risk passes, who pays which costs, and who handles export and import formalities.
They do not cover transfer of title, the price, payment terms, currency, governing law, or what happens on a breach. A term is not a contract. If someone says "we'll do CIF" and nothing else, almost nothing has actually been agreed.
The eleven rules
Each bar shows how far along the journey the seller carries the cost. The risk transfer point is stated separately underneath, because it is often somewhere else entirely.
EXW · Any mode
Risk passes: At the seller's premises, before loading
Buyer does everything, including export clearance in the seller's own country — which the buyer often legally cannot do. Widely cautioned against for cross-border trade.
FCA · Any mode
Risk passes: When goods are handed to the buyer's carrier
The workhorse for containers. Incoterms 2020 added an option obliging the buyer to instruct the carrier to issue an on-board bill of lading, which fixed a long-standing letter-of-credit problem.
CPT · Any mode
Risk passes: When goods are handed to the FIRST carrier
Risk passes long before the seller stops paying. This gap is the single most expensive misunderstanding in the whole set.
CIP · Any mode
Risk passes: When goods are handed to the FIRST carrier
CPT plus insurance the seller must buy. Under 2020 the default cover is the higher all-risks level.
DAP · Any mode
Risk passes: On arrival at the named place, ready for unloading
Seller carries risk all the way to destination but does not unload and does not clear import.
DPU · Any mode
Risk passes: After the goods are unloaded at the named place
The only rule where the seller must unload. Replaced DAT in the 2020 revision.
DDP · Any mode
Risk passes: On arrival at the named place, ready for unloading
Maximum seller obligation, including import duty and clearance in the buyer's country — which the seller often cannot practically do.
FAS · Sea / inland waterway
Risk passes: When goods are placed alongside the vessel
Bulk and break-bulk. Rarely right for containerised citrus.
FOB · Sea / inland waterway
Risk passes: When goods are on board the vessel
Correct for bulk on a named vessel; commonly misapplied to containers, where FCA is the right rule.
CFR · Sea / inland waterway
Risk passes: When goods are on board the vessel
Seller pays freight to destination port but risk already passed at loading.
CIF · Sea / inland waterway
Risk passes: When goods are on board the vessel
CFR plus insurance. Under 2020 the default is minimum cover only — materially less than CIP.
Choosing one for citrus
- Containerised fruit belongs on FCA, CPT or CIP — not FOB, CFR or CIF. The sea rules assume the goods cross the ship's rail as the seller's last act, which is not how a container terminal works. FOB on a container is one of the most common errors in the trade.
- EXW and DDP both put everything at one end and both create clearance problems: EXW asks a foreign buyer to export-clear in the seller's country, DDP asks a foreign seller to import-clear in the buyer's. Avoid both across borders unless you know exactly why you are using them.
- CIF and CIP insure at different levels. Under 2020 CIF is minimum cover, CIP is all-risks. If you are buying CIF and assuming full cover, you are not covered for what you think.
- DPU is the only rule where the seller unloads. If unloading matters at your end, that is the difference between DAP and DPU.
- Name the place precisely. "FCA Cape Town" is ambiguous. FCA at which terminal, which depot, whose premises? The named place is part of the rule.
Where the rules sit in the wider picture
Incoterms decide who bears what along the route described in the origin dossier. They do not touch whether the fruit is allowed into the destination — that is plant health and residues, which are separate regimes and separate failure modes. A consignment can be perfectly delivered under CIP and still be rejected at the border.