Incoterms (International Commercial Terms) are 11 standardised trade rules published by the ICC that define who pays freight, who handles customs clearance, who insures goods, and at what point risk passes from seller to buyer. They are used in millions of trade contracts worldwide and form the foundation of any international sales agreement. Without a clearly specified Incoterm, disputes over cost and liability are common.

Under FOB (Free On Board), risk passes to the buyer once goods are loaded on the vessel at the origin port — the buyer arranges and pays for freight and insurance. Under CIF (Cost, Insurance and Freight), the seller pays for freight and minimum ICC Clause C insurance to the destination port, but risk still transfers at the origin port when goods board. FOB gives the buyer more control over freight; CIF bundles shipping cost into the seller’s price.

For most UK importers, DAP (Delivered at Place) or DDP (Delivered Duty Paid) are practical because the seller bears transport costs and risk to the UK destination. For importers who want to control freight costs, FCA or FOB are popular alternatives. The right choice depends on your shipment mode, supplier relationship, and whether you have an established freight forwarding arrangement in place.

Three key changes: (1) DAT was renamed DPU (Delivered at Place Unloaded) to clarify unloading can occur at any named place. (2) FCA was updated so the buyer can instruct their carrier to issue an on-board bill of lading to the seller — solving a major letter of credit problem. (3) CIP insurance was upgraded from ICC Clause C (minimum) to ICC Clause A (all-risks), while CIF remained at Clause C.

Yes, Incoterms 2020 fully apply to UK trade. Post-Brexit, the UK is outside the EU customs union, so terms like DDP (where the seller handles import clearance) become especially relevant when buying from EU suppliers. UK importers must ensure their contracts clearly specify who handles UK customs clearance — Westconn Logistics can manage this process as part of our customs clearance service.

EXW (Ex Works) places all obligations on the buyer, including export customs clearance in the supplier’s country. UK buyers typically lack the legal standing or local agents needed to complete export formalities abroad. FCA (Free Carrier) is almost always a better alternative — it keeps export clearance with the seller while giving the buyer full control over the main freight to the UK.