Incoterms 2020 Cost & Risk
Who is responsible for each cost and risk stage under all 11 Incoterms 2020 rules. Includes transport-mode guidance, insurance requirements and the FCA on-board B/L provision.
For containerised or multimodal shipments: use FCA, CPT, or CIP - never FOB, CFR, or CIF. The ICC has explicitly cautioned that FOB/CFR/CIF are sea-only rules and cause LC discrepancies when the seller delivers to a container terminal rather than a vessel's rail.
For Letters of Credit: FCA, CPT, and CIP are the most bankable choices because they support on-board B/L notation under UCP 600 Art. 20. For bulk commodity shipments by chartered vessel, FOB and CIF remain standard. Use the Incoterms Selector Wizard if you are unsure.
Incoterms LC Compatibility Matrix
| Term | LC Rating | Primary Issue |
|---|---|---|
| FOB/CIF | Good* | Risk gap for containers before loading |
| FCA/CIP | Excellent | Requires on-board B/L addendum A6/B6 |
| EXW | Risky | Seller lacks control of B/L and export docs |
| DDP | Risky | Import clearance delays block LC presentation |
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Overview & methodology
What changed in Incoterms 2020?
Incoterms® 2020 (ICC Publication 723E) replaced the 2010 rules with three key changes: DAT became DPU (Delivered at Place Unloaded), expanding delivery points beyond terminals; CIP raised its insurance floor from Clauses C to Clauses A (all-risks); and FCA gained an on-board B/L option - the carrier can issue an on-board notation at the seller's request, solving the longstanding LC presentation problem for containerised FCA shipments.
CIF vs FOB: who pays what?
Numerical Example: CIF vs FOB for a $50,000 Shipment
Under FOB, the buyer arranges and pays the main carriage. Under CIF, the seller pays freight and insurance - but risk still transfers at origin (when cargo passes the ship's rail), not at destination.
FOB and CIF are sea-only - why does it matter for containers?
Container cargo is handed to the carrier at a Container Yard (CY) before being loaded onto the vessel. Under FOB, risk transfers when goods pass the ship's rail - but for CY delivery, the seller loses control of the goods well before that point, creating a risk gap. Use FCA instead of FOB and CIP instead of CIF for containerised trade.
Frequently asked questions
How many Incoterms are there in 2020?
Eleven. Seven for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU, DDP) and four for sea and inland waterway only (FAS, FOB, CFR, CIF).
What replaced DAT in Incoterms 2020?
DPU (Delivered at Place Unloaded) replaced DAT (Delivered at Terminal), broadening the delivery point beyond terminals to any place where the seller unloads.