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Incoterms 2020 - Rule Explanations

1. EXW (Ex Works)

The seller makes goods available at their premises; the buyer bears all costs and risks. Most favorable for the seller.

2. FCA (Free Carrier)

The seller delivers goods to a carrier at an agreed location. Export clearance is done by the seller. Suitable for multimodal transport.

3. CPT (Carriage Paid To)

The seller pays freight to destination but risk transfers to the buyer once handed to the carrier.

4. CIP (Carriage and Insurance Paid To)

Similar to CPT, but the seller also covers insurance. Suitable for high-value goods.

5. DAP (Delivered At Place)

The seller delivers to a named place. Buyer handles import clearance and taxes. Previously known as DDU.

6. DPU (Delivered at Place Unloaded)

The only term where the seller handles unloading. Buyer is responsible for import clearance and duties.

7. DDP (Delivered Duty Paid)

The seller handles everything including duties. Most favorable to the buyer.

8. FAS (Free Alongside Ship)

Seller delivers goods alongside the vessel at the port. Buyer handles loading and beyond. Used for bulk cargo.

9. FOB (Free On Board)

Seller loads goods onto the ship. Risk transfers once on board. For sea freight only.

10. CFR (Cost and Freight)

Seller pays freight but risk transfers at ship loading. Insurance not included.

11. CIF (Cost, Insurance and Freight)

Same as CFR but includes insurance. Common for sea shipments.

Sources:
- ICC Incoterms® 2020 Official Guide
- Korea International Trade Association, Korea Customs Service, KOTRA Trade Manuals

Incoterms 2020 Summary

Code Full Name Transport Mode Risk Transfer Point Key Notes
EXWEx WorksAll modesAt seller's premisesBuyer bears almost all responsibility
FCAFree CarrierAll modesAt agreed locationExport by seller, rest by buyer
CPTCarriage Paid ToAll modesWhen handed to carrierFreight by seller, risk transfers early
CIPCarriage and Insurance Paid ToAll modesWhen handed to carrierCPT + Insurance by seller
DAPDelivered At PlaceAll modesBefore unloading at destinationImport & unloading by buyer
DPUDelivered at Place UnloadedAll modesAfter unloading at destinationSeller responsible for unloading
DDPDelivered Duty PaidAll modesAt buyer’s premisesSeller pays all duties
FASFree Alongside ShipSeaAlongside vessel at portSeller handles to dock
FOBFree On BoardSeaWhen on board shipSeller to load, buyer after
CFRCost and FreightSeaWhen on board shipFreight by seller, risk transfer at ship
CIFCost, Insurance and FreightSeaWhen on board shipCFR + Insurance by seller
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