Incoterms 2020 are eleven standard trade terms that fix who arranges and pays for each leg of a shipment and the exact point where risk passes from seller to buyer. EXW, FOB, CIF and DAP are among the most quoted. Konsol Logistics, a Konya-based international logistics company, recommends agreeing the rule before you request freight rates.
What do Incoterms actually decide?
Incoterms are published by the International Chamber of Commerce and referenced in sales contracts. They answer three questions: who organises the transport, who pays which cost, and at what moment responsibility for loss or damage moves from seller to buyer. They do not settle the price, the payment method or who owns the goods; those belong in the contract itself.
The point where risk passes and the point where costs end are not always the same place. CIF is the classic example, and it is explained below.
EXW, FOB, CIF and DAP compared
The table shows the delivery point and the main carriage under each rule. Always read it together with the named port or place written in the contract.
| Rule | Seller has delivered when | Main carriage paid by | Transport mode |
|---|---|---|---|
| EXW (Ex Works) | Goods are made available at the seller's premises | Buyer | Any mode |
| FOB (Free On Board) | Goods are loaded on board the vessel at the named port of shipment | Buyer | Sea and inland waterway only |
| CIF (Cost, Insurance and Freight) | Goods are loaded on board the vessel at the port of shipment | Seller, to the named port of destination, with insurance | Sea and inland waterway only |
| DAP (Delivered at Place) | Goods are ready for unloading at the named place of destination | Seller | Any mode |
How do you choose between them?
- EXW places loading and export clearance on the buyer. That is hard for a foreign buyer without a local agent, so FCA is often the more practical alternative.
- FOB suits a seller who delivers goods to the port and a buyer who controls the ocean freight. For containers handed over at a terminal, many traders prefer FCA, which Incoterms 2020 offers for that purpose.
- CIF makes the seller pay freight and minimum insurance cover, but risk still passes at loading on board, not on arrival. A buyer who wants broader protection can agree higher cover or insure separately.
- DAP gives the buyer a price that includes transport to a named place. Unloading, import clearance, duties and taxes remain with the buyer.
Mistakes that cause disputes
The most frequent error is naming only the abbreviation. A sound clause reads, for example, “FOB Mersin, Incoterms 2020”: the rule, the named port or place, and the edition. “FOB Turkey” leaves too much open, and earlier editions differ in details.
Another mistake is using sea-only rules for road or air shipments. FOB and CIF belong to sea and inland waterway transport; for road or air, the FCA, CPT or DAP family is the correct choice. Finally, compare freight offers only when they are based on the same rule, because an EXW price and a DAP price cover very different scopes.
Key points to remember
- Incoterms divide cost, risk and tasks between seller and buyer; they do not set price or ownership.
- EXW is the seller's premises, FOB is on board at the port of shipment, CIF adds freight and insurance, DAP ends at the named destination.
- Always write the rule, the named place and “Incoterms 2020” in the contract.
- FOB and CIF are for sea and inland waterway only.
- Compare quotes on identical terms.
Matching your freight quote to the rule
Once your rule is fixed, use the Quick Quote form on the Konsol Logistics website. It checks your entries and turns them into a ready WhatsApp message that you send yourself. Mention the rule and the named place so the offer covers the right scope.
Frequently asked questions
Is CIF the same as FOB plus insurance?
Not exactly. CIF also makes the seller pay freight to the destination port, but in both rules risk passes once the goods are on board at the port of shipment.
Do Incoterms cover import duties?
Under EXW, FOB, CIF and DAP, import clearance, duties and taxes are the buyer's. DDP is the rule where the seller takes them on.
Do Incoterms set the sale price?
No. They allocate costs, risks and tasks only. The price, payment terms and ownership are agreed separately in the sales contract.
