Incoterms 2026 Explained: A Practical Guide for Shippers
Incoterms are standardized international trade terms published by the International Chamber of Commerce that define who is responsible for shipping costs, insurance, and risk at each stage of a shipment.
The 11 Incoterms 2026 Rules
EXW - Ex Works
The seller makes the goods available at their premises. The buyer is responsible for all transportation costs, risks, and customs clearance from that point onward.
FCA - Free Carrier
The seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. Risk transfers when the goods are handed over.
CPT - Carriage Paid To
The seller pays for the carriage of the goods up to the named place of destination. Risk transfers to the buyer when the goods are handed over to the first carrier.
CIP - Carriage and Insurance Paid To
Similar to CPT, but the seller is also required to obtain extensive insurance cover against the buyer's risk of loss of or damage to the goods during the carriage.
DAP - Delivered at Place
The seller delivers the goods to the named place of destination, ready for unloading. The seller assumes all risks involved in bringing the goods to the named place.
DPU - Delivered at Place Unloaded
The seller delivers the goods and unloads them at the named place of destination. The seller assumes all risks and costs associated with delivering and unloading the goods.
DDP - Delivered Duty Paid
The seller is responsible for delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination including import duties and taxes.
FAS - Free Alongside Ship
Used only for sea/inland waterway transport. The seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment.
FOB - Free On Board
Used only for sea/inland waterway transport. The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment. Risk transfers when goods are on board.
CFR - Cost and Freight
Used only for sea/inland waterway transport. The seller pays the costs and freight to bring the goods to the port of destination, but risk transfers when the goods are on board the vessel at the port of shipment.
CIF - Cost, Insurance and Freight
Used only for sea/inland waterway transport. Similar to CFR, but the seller must also obtain minimum insurance cover against the buyer's risk of loss or damage during carriage.
Frequently Asked Questions
What are Incoterms?
Incoterms (International Commercial Terms) are standardized trade terms published by the International Chamber of Commerce that define the responsibilities of sellers and buyers for the delivery of goods under sales contracts.
What replaced DAT in the 2026 revision?
In the Incoterms 2026 rules, DAT (Delivered at Terminal) was replaced by DPU (Delivered at Place Unloaded) to emphasize that the destination place can be any place and not just a 'terminal'.
Which Incoterm should a first-time importer use?
First-time importers often prefer DAP (Delivered at Place) or DDP (Delivered Duty Paid) because the seller handles most of the complex logistics and risks until the goods arrive near the destination.